• The song of blood and fire of foreign exchange trading one of the three top trading lessons

    read:2023/2/26 10:32:06

    the road to successful forextradingaccountstype forex trading accounts not smooth between ecstasy forextradingaccountsregister despair, between glory and humiliation, between blood and fire, how many speculators head broken and sunk in the sands of success is rare, the losers left the field in disgrace This is trading, this is also life a hundred years ago, a hundred years later is still the same Livermore in the "Memoirs of a great stock trader There is a passage in "Memoirs of a Stockbroker", which is also one of the authors favorite passages: There is nothing new on Wall Street, and what happened in the past will happen again and again in the future, because human nature never changes. This series of articles will look at the three top mistakes cashback forex most traders make: 1) unreasonable profit/loss ratios 2) unreasonable bars 3) unreasonable trading strategies The biggest mistakes Before we begin, please review the worst in your memory to uncover the scars of this kind of trading This type of thing is never pleasant, but it is an essential process for growth. Did you violate your trading rules? Did you fail to set a stop loss? Did you have an obvious plan before you entered the market? The reason for asking these questions is that they are inextricably linked to the top traders mistakes, which are hidden in the risk-reward ratio. The following chart summarizes traders trading win rates on the major currency pairs based on actual accounts (red means leaving with a loss, i.e. losing; blue means leaving with a profit, i.e. winning):  From the above chart, we can see that, with the exception of AUD/JPY (49% win rate), traders have a pretty high win rate on most of the currency pairs So, these traders must be great, right? Sad to say, no. Although these traders have a high enough win rate, they are still losing money and in the end, the desire to win on every single trade is digging their own grave. The desire to win, to not give in to defeat, makes traders stay too much in a trade that they shouldnt. Blinded by hope, rather than led by reason, traders hold on to losing trades. The chart below shows the average profit pips (blue) and average loss pips (red) of traders on the major currency pairs, as summarized by FOREX: look for the currency pair where the average profit of a winning trade exceeds the average loss of a losing trade. However, if the average loss is $2.34 and the average profit is $1, what is the significance of a 66% win rate? Did these traders plan to stop out when they lost $2.34 and take profit when they won $1 before they traded? If that was your plan, then get out of the game while you still can. In fact, no one plans with such an unreliable risk-reward ratio at all. The reason for this phenomenon is that traders are holding on to their losses and not placing them when they should be afraid. (First of all, traders need to realize that the market is unpredictable. No matter how good your analysis is and how good your IDEA is, it is undeniable that no one can predict the future. If you dont have an exit plan (like a stop loss) before entering a position then you need a stop loss that you should set at the time of opening the position, in many cases this will be of great help. In addition, when a trade becomes profitable, the trader can raise the stop loss to the break-even point so that even if the trade fails, the trader will not lose money. All of the above methods are designed to help traders overcome the number one trading mistake of illogical risk-reward ratios, and it should be noted that there are different ways to stop loss and take profit, and a thousand readers have a thousand Hamlets, so readers should try to find a method that works for them.