Losing money trading
Losing money trading Forex is easy. But some trading habits can contribute to this.
1. Going in the direction of a trend when it ends
This can trap because it looks like the past direction is going to continue. It is possible for a pair to reverse at this stage, or simply to move about in some volatility. Because there been a sustained directional move, should make for caution not optimism.
2. Taking multiple losing positions
This can be triggered by an error such as entering on a trend end or trading a breakout and trying to trade on it, instead of cutting losses. It happens and can ravage an account.
3. No stop-loss
Forex is a volatile market. It can react sharply to news events. Even the shortest trade can be affected in this way. A guaranteed stop-loss can protect against this or any sharp move.
4. Badly chosen stop-losses
It is possible to have an account cut up in smaller losses from stop-losses. It can be helpful to have a rationale based to some extent on the market when setting a stop-loss. In volatile markets, stop-losses can be repeatedly triggered, as the market swiftly reverses.
5. Staying too long in a position
Because Forex moves up and down, then any winning position will tend to meet its opposite. So even on short term trade expecting the reverse and preparing for it and having contingency plans constructed dynamically in the course of the trade may be helpful.
