A frighteningly high percentage of forex traders lose their
money in the markets.
It's so easy to do!
Here are ten top 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 $50,000 here, $150,000
there, some trades work, some don't, and all the time
you're building up 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 fast and as furiously 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 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 where you are, it's
11.30 at night, your family have all gone to bed, and
you're looking at another day of loses. 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 been 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 dropped by your clumsy wife, 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 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!
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your shirt after all, then take a look here to see how you
can get some serious help... http://tinyurl.com/5v6vpu
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