 |
Forex Trading: Ten Ways to Lose Your Shirt!
Author: Rob Best  | Posted: 10-04-2008 | Comments: 0 | Views: 2 | Rating: (50)  (?) 
 A frighteningly high percentage of foreign exchange traders lose their money in the markets.
It's so easy to do!
Here are ten ways to lose your shirt while trading currencies.
1. Maintain Fundamental Ignorance! Or, to put it another way, ignorance of the fundamentals! If you maintain a complete lack of understanding as to what drives the markets, what news releases and government numbers affect the markets, then you will lose your shirt - guaranteed!
2. Learn on a Demo Account! Demo accounts are a great way to learn. They're also a great way to build a nice, solid sense of false security. You trade $150,000 here, $150,000 there, some trades work, some trades fail, and all the time you're improving your trading game, right? You suspect the data is not quite as real-time as it might be in the demo, but you don't worry about it. And the emotions of trading virtual money, handed to you on a plate, and real money that it took you three months to pull together, are pretty much the same...aren't they?
3. Get Over-Leveraged! You drop $5,000 into the market, and your broker offers to turn it into $100,000, just like that, with a few clicks of his mouse. How cool is that? Now, you can go crazy, trade in bigger lots, take bigger hits, because you're in the $100,000 league! And hey, when your original $5,000 investment is gone in a day or two, don't worry. Your broker will soon call you up with one of those nice margin calls! Then you'll have to call your bank with one of those not-so-nice pleading-for-more-money calls.
4. Have No Trading Plan! You just want to lose money, right? And lose it as rapidly and as efficiently as you can. So the last thing you want to do is figure out where your strengths are, and set them down in a coherent way, matched in with a good trading methodology that suits you and that you've back-tested. Avoid those trading plans like the plague!
5. Over-Trade! You get in, you get out, you make five pips. You get back in a few minutes later, you get stopped out, you give your tiny profit away. You get in again, out, in, out, shake it all about, and before you know what happened, it's 11.30 at night, your family have all gone up to bed, and you're looking at another day of losing trades. You're on track to being shirt-free!
6. Set Tight Stop Losses! You must use stop losses on all your trades, of course. But to be certain of a total wipe-out, make sure those stop losses are as tight as you can get them to your entry point. You want your profits made in a straight line, right? So if the market starts to go up and down just a little bit, your tights stops will stop you out ' at a loss, of course!
7. Trade a Single Currency! You've got a really, really clear picture of what is about to happen with the Japanese yen, right? You know it's over-sold, and you're going long! But will you go long against the dollar? Against the British pound? Against the euro? Details, schmeetails! The yen's going up, and you don't care against what! Bye-bye, shirt!
8. Trade Against the Trend! You've heard all that "trend is your friend" nonsense, but you're the Contrary Trader! You boldly go against the trend at every opportunity, because all trends turn eventually, right? You also make a habit of catching falling knives, and sometimes you go down to the beach for a bit of tide-turning practice.
9. Ride Those Losses! Only losers quit, right? You decided against a stop loss of any kind, went to bed, woke up the next morning to find your position is 200 pips wrong and there are three missed calls from your broker on your cell phone. Whatever you do, don't close that sucker down! It'll come right. Eventually.
10. Cut Those Profits! Your trade is flying, it's making you money (against all the odds!) and, quite frankly, it has the potential to completely ruin your shirt-losing plans! So just cut it short! Be brutal. There is no need to let a good trade run, any more than there is to cut out of a losing trade.
So there you have it - ten top ways to lose your shirt as a currency trader!
Rate this Article:
Current: 0 / 5 stars - 0 vote(s).
Article Source: http://www.articlesbase.com/finance-articles/forex-trading-ten-ways-to-lose-your-shirt-383879.html
About the Author:What's that? You want to make regular serious profits from currency trading, instead of losing your shirt? Then here are the two steps you need to take...
Step 1 - do NOT do any of the above.
Step 2 - download a tested and profitable trading robot to help you. Do it now.
|
Submitting articles has become one of the most popular means of generating quality backlinks and targeted traffic to your website. Join us today - It's Free! |
|
Got a Question? Ask.
Ask the community a question about this article:
Q&A Powered by: 
Latest Finance Articles
Stock Market Volatility Helps In Making Money Using Stocks
By: Amit Kheterpal | 05/09/2008
Anyone who has ever ventured into the stock market would have gotten to know by now that the index can go up and down on any given date. That gyration can actually help you make good returns on the stock market.
Tips On How To Diversify Your Risk In The Stock Market
By: Amit Kheterpal | 05/09/2008
Stock market is not for the faint hearted they say. That is definitely correct and a lot of people who join the stock market bandwagon hearing stories about loads of money to be made usually are the ones who burn their fingers in the stock market very easily.
Making the Most of Your Business Banking Relationship
By: Ann Knapp | 05/09/2008
Anyone who owns a business can appreciate the need for a bank account to handle bill paying, deposits and payroll. But banks can assist business owners in so many other ways as well. In fact, having a reliable financial partner can help a business reach its greatest potential, as well as provide support during times of financial need.
10 Sound Budgeting Tips to Ensure Financial Freedom
By: Michael New Jr. | 05/09/2008
Here are 10 sound budgeting tips that will surely get you on the right track again. If you're in trouble with debt, this article is a must read!
Limited Liability Corporation: Do One And Save Your Wealth!
By: Ramapati Singhania | 05/09/2008
Limited Liability Corporation: One of the newest but BEST forms of incorporation
How Does Shared Ownership Housing Work?
By: Peter Kenny | 05/09/2008
Over recent months the mortgage market has fallen into a sharp decline as a result of the global credit crunch that swept across the nation last summer and has been wreaking havoc in the financial markets ever since
How to Improve Your Income and Cash Flow
By: Brad Griffin | 05/09/2008
You cannot have a successful business person without a suitable cash flow. If this secret is so well known, why are so many struggling businesses? When running the daily operations of a business money, or cash flow is a big challenge. I will present you 7 tips to help you improve your income and cash flow.
Pasadena, TX Auto Insurance
By: Russell Neal | 05/09/2008
Insurance carriers use what is called a community rating system to determine base insurance rates in a particular zip code based on the number of collisions and claims that occur per annum within that zip code. Even though Houston has a great many vehicle collisions, Pasadena, Texas auto insurance tends...
More from Rob Best
Covered Calls: Maverick Investor Says Motley Fool are Wrong!
By: Rob Best | 30/03/2008 | Finance
Covered calls are a superb way of making a steady 3% to 5% a month from the stock market. A piece on Motley Fool called "Stay Away From Covered Calls" by Dan Caplinger reveals how, sometimes, even the experts make mistakes. Mr Caplinger seems not to understand the power of covered calls. This article sets the record straight.
Everything You've Been Told About Investing is Wrong!
By: Rob Best | 05/03/2008 | Finance
There ARE high yield, low risk investments out there, despite what the 'experts' might tell you. You DO have different investment options available to you - ones that are far more powerful than anything you get offered by your financial advisor, or that you see advertised in the media. Welcome to the world of the Maverick Investor!
Below Market Value Houses: How to Find Bmv Deals at Auction
By: Rob Best | 16/02/2008 | Finance
The property market is getting more challenging for investors. It's now even more important to invest wisely - and that means buying below market value property only. Learn how to buy BMV properties from auction houses, without getting involved in competitive bidding, and without wasting time and money on properties you may lose to another investor.
A Killer Forex Strategy: Three Ways to Make Consistent Profits From the Forex Markets
By: Rob Best | 08/02/2008 | Finance
Do you dream of making consistent profits from the foreign exchange markets? It's a highly risky game that can strip the unwary of their cash in the blink of an eye! In fact, there are just three ways to significantly increase your forex profits. I reveal them all here, and discuss each one in detail.
Volatility Trading: How to Profit From the Big Moves, Without Having to Pick the Direction
By: Rob Best | 06/02/2008 | Finance
There's a big myth at the heart of the stock market, and 99% of traders have bought into it without ever really thinking about it. Here, we uncover the myth, reveal the secret, and show you how you can profit from it to a far greater extent than anything you're doing right now.
The Biggest Stock Market Secret: Don't Place Another Trade Until you Understand This!
By: Rob Best | 05/02/2008 | Investing
There's a big myth at the heart of the stock market, and 99% of traders have bought into it without ever really thinking about it.
Here, we uncover the myth, reveal the secret, and show you how you can profit from it to a far greater extent than anything you're doing right now.
A Killer Forex Strategy: Three Ways to Turn yourself Into a Profitable Forex Trading Machine
By: Rob Best | 05/02/2008 | Investing
Fifty percent of all forex traders lose money over the long term.
Make sure you're in the fifty percent that MAKE money, consistently!
The best foreign exchange traders have sophisticated software that gives them trade signals to enable them to develop a killer forex strategy. The only way you're going to make money from forex trading is to have access to this software.
Two of the methods I'll share with you give you indirect access. One gives you direct access.
Take your pick!
A Killer Investment Strategy: the Three Sources of Cashflow From a Lease Option Strategy
By: Rob Best | 03/02/2008 | Real Estate
How can you increase the monthly cashflow coming from your investment properties?
It's great having one investment property, or two, or even an entire portfolio. But if there's no capital growth (as looks likely in 2008) and the rental payments are only covering your costs, how on Earth are you going to make money from your investments?
Find out how to lock in your sale profit from Day 1, take a bigger moving-in deposit, get 20% more every month AND have tenants who love you!
|
|
Finance 
