Learn Three Effective Strategies to Avoid Mistakes in Forex Trading

2023-08-11
Summary:

Mature foreign exchange traders often emphasize the importance of taking advantage of the situation, but if choosing the wrong direction, appropriate strategies should be taken, such as adhering to the set stop-loss rules to avoid huge losses.

Mature forex traders always emphasize the importance of taking advantage of the situation when giving advice to beginners. For personal forex speculation, direction is everything. Choosing the right direction is the only way to make money. So what should we do if we choose the wrong trading direction?


In fact, the three common methods we use in forex trading are stop loss, lockdown, and dead shoulder, each of which is particularly reasonable. The key is to make appropriate choices at the right time to avoid the drawbacks or risks of each method.


1. Stop loss
Adhere to the stop-loss set by oneself. There are several common basic methods for stopping losses: fixed point stops, stops based on support resistance levels, and stops based on the amount of funds withdrawn. When there is a situation where the direction of forex trading is reversed, sticking to one's own stop loss is a better choice. Many people may not choose to stick to the stop loss because they are worried about being stopped at the reversal point. If the stop loss is at the bottom, a reversal market will occur as soon as they sell. The editor believes that since there are stop-loss rules, it is necessary to implement them. In forex trading, rules and principles are very important.


2. Lock the warehouse
First, let's talk about why forex trading is locked. There are generally three possibilities.
One possibility is to judge the market and hold orders in the opposite direction.
Secondly, it feels like the floating losses are too large.
Thirdly, it is a small market in the big market, such as a small pullback after a wave of big gains. At this time, although the position is long, a small number of short orders are also placed to earn some small points.


The reason for choosing to lock in the position is because they are unwilling to sell loss orders and use hedging as a compromise method to handle them. I can't bear to see a large loss order sold, trying to lock in the position and trade time for space. In forex trading, there is an error, but there is a judgment about the market situation. I hope to correct the error, or, after trading, I am unwilling to suspend the loss and have illusions about the market, using lockdown to control the expansion of the loss.


Forex lockdown is an effective way to control losses and risks. But the reality is far from so beautiful, and the final result may be that the positions become larger and larger, especially after heavy losses. The risk of lock-in is very high. It is possible to unlock it in actual combat, but there is also a high possibility of a final warehouse explosion. The best way to avoid the subsequent trading risks brought about by lockdown is to trade lightly.


3. Hard shoulder

The data shows that 75% of the bedding will be automatically untied within a week. 40% of the bedding will automatically unravel within two days. If stop losses are frequent and the position is incorrect, the continuous loss caused by stop losses can also be a problem. So, in fact, carrying hard is also a choice. Many positions are sold out because of carrying hard, and some traders are able to unwind because of carrying hard.


The most important task in forex trading is to manage positions well. We would like to emphasize this point to everyone. If you can't handle the position management well, or if the position is too large, don't force it. Remember!


Forex trading operations emphasize a mindset that comes from confidence in oneself. This confidence comes from a theory: when the price does not deviate too far from the value and the wrong purchase is made, stop the loss and close the position; do not rush to trade; observe and confirm the trend before taking action. That is to say, it is important not to trade frequently. In fact, forex only has two time periods a day, after 2 pm and after 9 pm. Because the European market and the United States are open at that time and have high volatility, these two time periods can be done, and the rest can be done at other times. It is almost impossible to always go in the right direction by speculating in forex, but the fundamental reason why forex trading always goes wrong is the lack of a trading system: the reasons for opening positions, the conditions for closing positions, fund management, and forex traders reviewing and summarizing the trend when doing the opposite.


When trading in the wrong direction, traders are often prone to emotional fluctuations and may make impulsive decisions. Therefore, maintaining composure and rationality is very important. Don't let emotions influence decisions; stick to trading plans and risk management principles. When a trade fails, traders should reflect and summarize their experiences and lessons, analyze the reasons for the errors, and learn from them. By learning and accumulating experience, one can improve one's trading skills and judgment abilities to avoid similar mistakes from happening again.


Disclaimer: Investment involves risk. The content of this article is not an investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product.

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