A number of practices when used in daily forex trading can only mean incurring loses. Sometimes as traders try to make more money from their trading, they end up losing due to poor decisions. This can change if you are equipped with the right knowledge and use the right trading strategies that in turn translate to profits.
While it is never the intention of any forex trader to take a downward trading approach, it sometimes happen that they do. Unfortunately, choosing this path comes with more demerits than benefits. You are likely to lose more money than you expect as well as move to a lower trading position. Furthermore, a larger return is needed to bring back the lost capital to its original sometimes double the lost amount. In addition to this to get back to the previous status of you, need to use more money sometimes double what you lost to bring back the capital amount to where it was hence the growth of your capital is largely affected when you keep losing money. Averaging downwards may work a number of times but the more you keep losing money the more challenging it becomes.
Always prepositioning for news
While traders know the news events likely to move the market, most do not take the time to know the direction in advance. While a trader may have the confidence about the market trends and news offers, he may fail to predict the market’s reaction to this news. There are always additional statements and figures that make the news illogical and as such useless to the trader. This means therefore that taking a position before the news can easily jeopardize the trader’s success chances.
Choosing to trade after the news
Most traders rush into market trading the moment the news is released. Doing this may work as it could mean making quick cash fast but it is the worst move if you do not have a solid strategy to go about it. Trades usually turn around quickly meaning that what once seemed like a good move could easily become loses. A good trader with a great Optionfair review knows that he or she can only trade successfully when the volatility fades and stable trends set in.
It is not true that the more you risk in forex trading the more you are likely to gain. On the contrary, traders who risk more than 1% of their capital usually end up losing more. The common rule is that a trader should not lose more than 1% of the capital on a single trade. Furthermore, professional traders with a good AvaTrade review will constantly risk less than one percent. This, however, doesn’t mean that you should never risk at all.