Article Categories
» Arts & Entertainment
» Automotive
» Business
» Careers & Jobs
» Education & Reference
» Finance
» Food & Drink
» Health & Fitness
» Home & Family
» Internet & Online Businesses
» Miscellaneous
» Self Improvement
» Shopping
» Society & News
» Sports & Recreation
» Technology
» Travel & Leisure
» Writing & Speaking

  Listed Article

  Category: Articles » Business » Home Based Business » Article
 

Revealed - Million Dollar Forex Investing Mistakes




By David Jenyns

Anytime that you are investing in the Forex market, you are going into the Market blind. You don't know what point of the investing trend you are entering in at. You might be investing in a Forex stock just before the trend changes. Smart investing means you need to protect your trading float and set up a stop loss. This needs to be done before you enter a trade, so that there is no room for error, or last minute indecision. A stop loss is simply a predefined point at which you exit the stock.

Effectively, it's like drawing a line in the sand underneath the share price, saying, "If the share price falls below this line, then the stock hasn't done what I thought it was going to do, and I'll exit the position."

This allows you to protect your investing trading plan, because it cuts your losses short, and guards against an all too human tendency to want to believe you must be right.

95% of investing in an entry Forex position means you are expecting to profit from the trade. If, however, the share-investing price goes against you, you might feel the need to justify why you bought the stock by holding onto it until it turns a profit. You might have heard the idea that all big investing losses once started as small losses. Well, while the share price continues to go in the wrong direction, those losses grow in lockstep. This is why you need to have a stop loss in place – it's like having an ejector seat that tells you when to abort the mission.

One of the most common question I'm asked when traders are introduced to a stop loss is "How wide should I set my stop?"

In other words, how much room should I give the stock to move? There are no definitive answers to this question because it depends on what time frame you're investing in. If you're a shorter-term investing trader, you're going to have a stop loss that's set closer to the share price. If you're a longer-term investing trader, you'll give the share price a little bit more room to move and set your stop loss lower.

Once you've identified what time frame you're looking at trading, you need to be able to remove the normal market noise (volatility) in that particular time frame. You don't want to have to close out of an investing position just because a share price moved a little bit due to its normal trading volatility.

In fact, there are some serious drawbacks to setting tight stops.

First, you'll decrease the reliability of your system because you get stopped out more often.

Second, and probably a little bit more importantly, you dramatically increase your transaction costs, because you're trading transaction costs make up a major proportion of your business expenses.

To give yourself a fighting chance, you want to trade a system that doesn't chew through excessive brokerage fees. This is one of the major reasons I steer my clients into developing a trading system that runs over a slightly longer time frame. With the correct system in place, and your investing risk minimized, you are well positioned to maximize your trading profits.
 
 
About the Author
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
David Jenyns is recognized as the leading expert when it
comes to designing profitable forex trading systems.

Discover the "secret formula" of trading that anyone can use
to consistently generate BIG profits from the market by
downloading your FREE copy of David's new Ultimate
Stock Trading Systems course.

Click Here To Download ==> Stock Trading Systems
http://www.ultimate-trading-systems.com/forex.html
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-

Article Source: http://www.simplysearch4it.com/article/9930.html
 
If you wish to add the above article to your website or newsletters then please include the "Article Source: http://www.simplysearch4it.com/article/9930.html" as shown above and make it hyperlinked.



  Some other articles by David Jenyns
What Would You Rather Do: Read About Someone Elses Forex Success or Experience Your Own
You can draw some useful parallels between running a business and Forex trading. For instance, most successful businesses keep statistics on everything from their conversion rate, to their average dollar sale, to the ...

The Active Trader Reveals Effective Ways To Deal With Losses
At some point in the active trader's career, he will be faced with a string of losses that will bring his confidence to an all-time low. Every active trader ...

How To Win In Futures Trading With This Simple Tactic
Surprisingly, many profitable speculators have success rates between 30% and 50%. Futures traders are not successful because they predict prices well. They're winning because their profitable trades far exceed their losses. The truth of ...

Are These Simple Trading Mistakes Costing You Money In The Forex Market
The 2% rule is a powerful tool in Forex trading. By adopting this rule you're using a strategy that decreases the size of your losses during losing streaks, ...

Discover The Hidden Online Trading Costs That No One Tells You About
One of the cardinal rules of Forex trading is to keep your losses small. With small Forex trading losses, you ...

The Easy Secrets To Determine Stock Market Position Sizing
When trading in the stock market, position sizing is where all the tools of money management come together. It's perhaps the most important part of your stock market money management rules. Position sizing is simply ...

  
  Recent Articles
Honest Riches...Is it Really Honest Money Making Guide?
by Cher K Markov

The Big Secret to Making Money With Multi Level Marketing
by Tim Stephens

Are You Running Your Business Like Eeyore?... Or Like Tigger?
by Jeff Baas

Joys of Working at Home
by Earl Williams

Who Do You Sign Up With?
by Roger Gurung

MLM Success and Choosing a Company - Business Models Drive the Behavior in the Field
by Terry Montague

Don't Get Scammed - Use These Tips To Find The Best Paid Online Survey Jobs!
by Dean Caporella

Four Reasons Why Good Time Management Technique Will Boost Your Home Business Productivity!
by Dean Caporella

Discover the Secrets to a Top Home Based Business
by Gary Wood

How to start affiliate marketing business?
by Evelyn Johnston

Enter Data Online - Work From Home Benefits and Drawbacks
by James Bradley

Are You Suited To Work From Home?
by Roger Gurung

Can't connect to database