Probably the most important tip I can give you is to accept the fact that some trades are just going to lose. There is nothing you can do about that. Every trader has losing trades. It is part of the forex game, forex is a game, there are buyers and sellers, and our job is to pick the right side. We can't always do it, but if we enter trades with at least 3 strong technical & fundamental reasons, then we give ourselves the best chance to succeed in the long run.
GBPCAD has gained this week but it managed to still hold within the Ichimoku cloud in the daily timeframe. The price ran to a fresh six-week peak today at 1.7376, climbing above 1.7340, which is the 23.6% Fibonacci retracement level of the upward wave from 1.5875 to 1.7790, following the rebound off the six-month uptrend line. The technical indicators are ...
The blender company could have reduced this risk by shorting the euro and buying the USD when they were at parity. That way, if the dollar rose in value, the profits from the trade would offset the reduced profit from the sale of blenders. If the USD fell in value, the more favorable exchange rate will increase the profit from the sale of blenders, which offsets the losses in the trade.
However, this can steer you away from a carefully planned trading strategy. Even worse, it could cause you to make rash decisions, with the hope of turning that losing trade around, causing you to lose much more money than you would have if you had just left it to play out. Instead of focusing on the long term plan, your mind wants to focus on making the best out of this short term losing position.
Greed – There’s an old saying that you may have heard regarding trading the markets, it goes something like this: “Bulls make money, bears make money, and pigs get slaughtered”. It basically means that if you are a greedy “pig” in the markets, you are almost certainly going to lose your money. Traders are greedy when they don’t take profits because they think a trade is going to go forever in their favor. Another thing that greedy traders do is add to a position simply because the market has moved in their favor, you can add to your trades if you do so for logical price action-based reasons, but doing so only because the market has moved in your favor a little bit, is usually an action born out of greed. Obviously, risking too much on a trade from the very start is a greedy thing to do too. The point here is that you need to be very careful of greed, because it can sneak up on you and quickly destroy your trading account.
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You need to not over-trade. Most traders trade way too much. You need to know what your trading edge is with 100% certainty and then ONLY trade when it’s present. Once you start trading just because you “feel like it” or because you “sort of” see your trading edge…you kick off a roller coaster of emotional trading that can be very hard to stop. Don’t start over trading and you will likely not become an emotional Forex trader.
Challenge: Banks, brokers, and dealers in the forex markets allow a high amount of leverage, which means that traders can control large positions with relatively little money of their own. Leverage in the range of 100:1 is a high ratio but not uncommon in forex. A trader must understand the use of leverage and the risks that leverage introduces in an account. Extreme amounts of leverage have led to many dealers becoming insolvent unexpectedly.
GBP/USD bounced off support yesterday just prior to the BoE, and drove further higher in the wake of the meeting. The rally doesn’t mean much so far, though, as price remains well contained within a developing wedge that is seen as leading a meaningful move soon. A break above 13173 could get the upside going, while a break below 12954 may perhaps be even ...