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Online Forex Trading Accepted Wisdom That Will Lose you Money
Author: Sacha TarkovskyWhen I read a lot of accepted wisdom by so called experts, I wonder if these individuals have actually traded in their lives.
Here is some common advice that I see all the time, that if you follow it you will lose.
Dont fall into the trap of accepting it or following it.
Here are 6 of my favorites:
1. Day trading is a low risk high reward way to trade
How many writers do you see talk about day trading and how successful they are at it?
Lots!
Now:
How many of them can display a real time track record of profits over the long term?
None.
This is simply the dumbest way to trade there is.
All short term volatility is random.
You can never get the odds in your favor and you will lose and lose quickly.
2. Knowledge is power
No its not.
Only the RIGHT knowledge is power.
Trading is made very complicated by many experts yet, simple systems work best and the real problem for most traders is acquiring self confidence in their own ability and discipline.
Most traders like to follow others and if you do that, you will more often than not lose.
3. Buy low sell high will make you money
Well we all want to do this:
Pick the market bottom and sell the market high but its simply not possible.
Take an example:
Prices are moving to support so a trader buys, trying to predict a bottom and hope support holds.
Well, thats a worthy way to lose your money trading against price momentum.
You need to wait for the turn and see price momentum move back up.
Sure, you will not get in at the bottom but the odds will be in your favour.
On the other hand, a breakout occurs of necessary market highs so the trader thinks:
Cant purchase that and waits for the pullback.
Of course, it never comes and the trader is left watching one of the biggest trends of the year accelerate away from him.
He should of course have bought the first break!
Its a fact:
Most enormous trends develop from breaks of necessary market highs or lows and if you dont follow them you will not catch the enormous trends.
Fact is:
Buying low and selling high will never make you money Buying high and selling higher will
4. Listen to the news.
This is a worthy way to lose money.
All those experts taking convincingly about where prices should go and its all so believable.
Of course, where prices should go and where they do go, are two different scenarios.
Experts are not traders and are there to entertain and give worthy stories.
More often than not their incorrect dont listen to an expert, use your own brain and make your own mind up.
5. Paper trade will assist you
Use a demo account and you will sharpen your skills. To a degree its true, but its use is limited in helping you become a worthy trader.
As there is no money on the line and no pressure paper trading is easy.
When youre in the brutal world of real trading and thousands of dollars are on the line the experience is far harder.
6. Trail stops quickly
The idea here is to lock in profits.
Most traders become so obsessed with doing this they simply get stopped out of a trade and are never able to follow a enormous trend.
The fact is forex trading involves taking a risk.
Try and restrict the risk to much and you will simply never make any enormous profits.
Traders get so obsessed with avoiding risk they actually create it and guarantee they will lose.
These are 5 of my favorite accepted wisdoms that will see you lose and we will cover some more in part 2 of this article series.
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Keywords:
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