Friday, May 27, 2016

Why Should You Not Rely on Short Term Trading

The general rule of short-term trading is as follows – the shorter the duration of the, the lesser the profit potential there is. 

Professional forex traders know that the market may make a tiny movement in one minute, it may continue moving in 5 minutes and may further move in an hour, and we cannot determine as to how huge the movement it will make after a day or a week. 

Trading on a short term narrows the potential of profit. That clearly explains why you can barely hear anyone who has achieved great heights from short-term trading. 

Some traders point out that they are working during the day, which is the reason why they have insufficient time in keeping longer trades, and thus why they rely on short term trading. Because of this reason, they believe that it’s wise to close their trades right away instead of leaving it overnight, in order to keep the risks at a minimal level.

But what if the market turned to your favor overnight? You’re basically depriving yourself of potential profits, and you’re just settling for smaller amount of profits. 

Also, you can actually control your risk without having the need to close the trades altogether. There are methods to minimize your losses. Remember, you are able to place stop-loss levels on your trades. When you place an order with a stop-loss, you may only lose a predetermined amount of money, so you don’t have to fear that you will lose more than what you expected.

Most importantly, by exiting your trades at the end of the day, or worse, at random moments (for example 5 minute, 10 minute charts), you’re basically severely restricting your potential profits. The difference between the winners and the losers is that the winners stay in their profitable positions, while the losers exit too soon. This way, they are still losing money – basically by not being able to acquire the potential profits that the winners enjoy.

If you want to increase your profits, you have to learn to stick to your winning positions. Remember, the longer you stick to your trades, the bigger the profit potential there will be. Just look at the successful farmers, they never dig the plants up every few minutes just to know how much they have grown. They just patiently wait and let them grow. 

The traders might obtain some valuable lesson from the natural process of growing. To be a successful trader, you need to learn how to stick to your winning trades, you just have to let it grow naturally. 

Acquire some useful information about forex trading by reading our educational forex articles. Find out who the best forex brokers are, refer to our official website –

No comments:

Post a Comment