Why Retail Traders Have a High Failure Rates
WHY RETAILTRADERS HAVE A HIGH FAILURE RATE Poor discipline Inadequate money management (capitalization) Cutting winners short, letting losers run Bad service from broker Use of poor trading strategies that don't reflect the statistical realities of the Forex market 02 Money Management The amount of cash risked on 01 Poor Discipline E 03 Capitalization each trade should be calculated from account size and ideally also market volatility. Losing trades are inevitable and must be accepted calmly. Traders require starting capital of at least approximately $500 with brokers that allow trading in micro-lots. RETAIL TRADERS 04 HIGH FAILURE 05 RATES Cutting winners short, letting losers run Bad Service From Broker Speculative markets have been shown to have statistically excessive returns, therefore traders are more likely to achieve an overall profit by ensuring wins are large than by being "right" most of the time. Many retail Forex brokers charge high commissions and outrageously excessive overnight financing rates, unfairly punishing traders who let winners run. Poor Trading Strategies 90 a. Common technical analysis indicators produce random results, as does price action analysis on a single low timeframe. b. The use of stop losses is misunderstood, they should either be wide (to help ensure a win) or tight (to help ensure a profit), many traders fail to use them optimally to secure the required reward to risk ratio. Proven Forex Trading Edges 1 Buying currencies with high interest rates and selling currencies with low *interest rates. 2. Following momentum (trading with the trend): since 2008 , trading in the direction of the 3 month trend produced an unleveraged annualized return of approximately 10% on the 4 major currency pairs.Trade the "hot hand" - no matter how high or low the price, it can always go higher or lower. 3. Mean reversion: currency pairs have tended to correct after strong moves against the 3 month trend, especially where the weekly move is greater than 2%. "BUY WHEN ITS GOINGUP" AFTER A DIP IN AN UPTREND "SELLWHEN ITS GOING DOWN" AFTER A RALLY IN A DOWNTREND НН LH НН LH HH HL LL LH HL LL HL LL Get professional technical analysis at DailyForex.com or learn more about how to implement these successful trading strategies at FXAcademy.com DailyForex EX Academy WATCH • LEARN • TRADE!
Why Retail Traders Have a High Failure Rates
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