The Forex market waits for no one

The Forex market waits for no one

All possible rock star dreams are to reach the top of the charts, it may be in their particular genre, or even in a broad category. The problem with being at the top of the charts is that, once you’re there, the only way forward is down. Thus, they sit back and wait for the inevitable to happen. It might be a day, it might be a week, but it’s gonna happen.

Forex investors, compared to rock stars, often examine currency market trends in the same way.

If the Forex market is maintaining an upward trend, the forex trader is immediately guessing “how high is too high”? The word “guess” is the key word here. This market is now on an upward trend. There may be a bit of a massive profit taking sale, but that doesn’t take away the fact that the currency market is still in an upward trend.

See weekly chart. Just for fun, watch how the weekly chart contradicts the 30-minute chart. It’s the difference between long-range vision and nearsighted vision. The weekly chart will tell you that this trend is far from over. Of course, anything can happen at any time can change everything. If it was easy, everybody would be doing it. But that is no reason to leave the money on the table and lose this position for as long as the market allows.

One way to play your position is to get out before you have to take inevitable profits with a wave of sales that will change the direction of the market. It’s a fool’s game, but on the other hand, no one should complain about a profit. So, while you are selling off your long position with a considerable sum; good for you. However, if you are looking up and choosing a settlement career with a short position, good luck. You can take a beating, and with good reason. Selling on an upward trend does not look good on paper, and looks worse in practice.

The best way to protect your profits is the same formula that would be used to limit your loss. That closest and dearest friend is the stop-loss order. If you stopped you in one of those situations where you can be sure the Forex market was specifically designed to get you to your stop-loss order and then turn around again, don’t worry. Come back with a new order and don’t wait for the forex market to come back to you. Forex trading waits for no one and certainly turns around to pick up the stragglers.

We’ve been sitting in these funds for some time now. And the question of how high is too high’ at the moment is unfounded. When the forex market is peaking, it may be time to move forward with caution. But the rock star isn’t sure he’s at the top of the charts.

Many novices enter the forex market without a minimum of formal preparation and without something fundamental when trading: Capital Management. What everyone talks about and few understand. The worst thing is that all these people are fed by harmful and misleading marketing that makes them believe that they only need to “earn a few pips to be successful in this market”. That is false or at least very debatable. Analyze it mathematically:

We have a novice trader (without formal training like many others) who thinks he should only “take 10 pips out of the market”. In other words, your profit is 10 pips and in principle you also risk 10 pips (your stop loss where your losing position is closed). In conclusion the risk: it benefited is 1:1 and this way of trading is underpinned by the weak argument that it “could” work with enormous leverage and large numbers of lots.

Let’s be very generous with this newbie trader and imagine that he has a system that has a 50% chance in favor and 50% against. Let us also suppose that it starts with a capital of 10,000 dollars (the amount my dear friend is indistinct). Now, if we had a sample of 20 trades where this trader loses uninterruptedly in the first 10 and gains uninterruptedly in the second 10 then at the end of the sample the trader’s capital would apparently be intact. “Apparently.” If you’ve ever traded, you know what I mean. Here I am not taking into account the commission, spred, interest, etc. charged by brokers for using your platform. So your final capital will ALWAYS be less than your initial capital.

Leave a Reply

Your email address will not be published. Required fields are marked *