I read on a bulletin board a traders comment that on his first outing trading the E-Mini S&P 500 he lost on each of his trades. He noted though, that had he had a wider stop each of his trades would have been profitable and that therefore he would be trading with a wider stop in future.
A wider stop on these particular trades may have worked, but this does not mean that a wider stop per se is the answer. In fact, everyday there is the possibility of any given trade going into profit if given enough room, but that does not a wise strategy make. This trader was a seller in a market that subsequently went down; hence he could see that had he given his position a bit more room he would have made a handsome profit. Unless this trader has the ability to always accurately predict the direction of the market he is going to experience days where he is wrong and the market goes against him, in which case his potential for loss with wider stops is greater.
When deciding an appropriate amount to risk on any trade (i.e. size of stop) a trader has to consider more than the potential profit on a particular trade on a particular day. What this trader was saying to himself was 'If I had a 3 point stop instead of a 1 point stop, I could have made 15 points; therefore I will always use a 3 point stop!' Partly what he was saying to himself was 'I was right!' But he wasn't right; in the time frame of his trades and within the risk limit of those trades he was wrong, his timing was off and that is what he needs to work on.
He is also making two assumptions:
1) That having a bigger stop and therefore bigger open losses will not affect his trading composure and performance (how do you feel if you are risking $10?? $100?? $1000?? $10,000?)
2) That he would have held on to his profitable trade until he gets an exit signal (it is easy to assume after the event that we would have got out at the very best moment)
The truth is we are all much weaker than we would like to assume. The biggest challenge to profitable trading is sticking to our own self-imposed loss limits, be they on a per-day or a per-trade basis. What this trader did on this day was stick to his limits, which is highly commendable; he was just having difficulty accepting his results. No one likes losing money and no one like being wrong, but to be successful in trading we have to be accepting of both.
Forex Signal Services
What are Forex signals? Forex signals are paid services offered by some brokers and independent Forex annalists. Companies that offer forex signals monitor and analyze the market for you, providing you with their data via desktop alerts, email or even SMS and pager alerts.
Trading Tips No 1: Learn How to Trade The Moment of Truth
So you have learned how to trade the markets by mastering a few trading tools like Moving Averages, Channels, Stochastics, MACD, or RSI - that is a great accomplishment achieved by only a few. However, having the tools and rules to trade markets successfully, year in and year out, is only half of the challenge. The other half is far more daunting and achieved by even fewer investors - I am talking about good old-fashioned discipline. That is, discipline to follow your indicators and rules without fail - every trade entry and every trade exit. This is why it is critical that you learn how to trade. This is the 'moment of truth' in the life of every trader or investor.
Money Management, Part 2
What is Forex Trading?
Forex, or Foreign Exchange, is the simultaneous exchange of one country's currency for that of another.
Day Trading Course or Day Trading Technique Seminar: Learn Day Trading Education
Profitable day traders recognize that momentum trading is among the fastest & most effective ways to harvest BIG piles of cash in the stock market.
Trade Exit - How To Cut Losses And Let Profits Run
Cut your losses short and let your profits run. This is the essence of your trade exit rules.
Stocks Trading - Advantages and Disadvantages
What is Stocks Trading?
Throughout our course on futures trading, we have tried to point out to you that there is a great difference between having an investor attitude and being a trader. There are also many similarities. In one sense, a trader is someone who invests in his own trading ability. Therefore, in that sense trading is investing. Trading and investing are interrelated. You come to realize this through experience.
E-currency Exchange Trading
If you are reading this article you are probably one of the many people who have spent countless hours searching for unique ways to make money on the internet. Very few people have gone on to succeed and most have failed miserably time and time again.
Hedging Foreign Exchange Risks
The exchange rate of the Macedonian Denar against the major hard currencies of the world has remained stable in the last few years. Because of the IMF restrictions, the local Narodna (Central) Bank does not print money and there are no physical Denars in the economy and in the local banks.
FOREX - Where Fortunes Are Made Everyday
The Foreign Exchange Market ? better known as FOREX - is a world wide market for buying and selling currencies. It handles a huge volume of transactions 24 hours a day, 5 days a week. Daily exchanges are worth approximately $1.5 trillion (US dollars). In comparison, the United States Treasury Bond market averages $300 billion a day and American stock markets exchange about $100 billion a day.
The following situation happens quite often to many traders. Look it over and see if it has been happening to you:
The Seven Most Traded Currencies in FOREX.
Currencies are traded in dollar amounts called "lots". Onelot is equal to $1,000, which controls $100,000 in currency.This is what is known as the "margin". You can control $100,000worth of currency for only 1,000 dollars. This is what is called "High Leverage".
Commodity Trading - Advantages and Disadvantages
What Is Commodity Trading?
Mechanical or Discretionary Trading - Which is Best?
Sending Signals for Trading in Forex
Forex signals are sent by a forex firm to their subscribers in order to buy and sell currencies. These signals are called entry and exit signals for the forex dealers. The firms, which send this forex signal, do so after tedious and meticulous research and analysis into the currencies that their dealers are trading in. For example a firm may send the entry and exit signals at designated time frames in real time. These will remain valid for a short period only after which they are going to be different.
Where is the Market Going?
If you ask me whether the market will have moved up or down by this time next year, well I may as well flip a coin, because I don't know.
Getting a Forex Trading Education
Many Americans are interested in getting involved in forex trading. Before doing this, you should get a forex trading education. You should never get into forex trading without forex trading education. With the proper forex trading education, you can be on your way to making a tidy profit.
Q1: When you consider that the foreign exchange market has become the world's largest financial market, with over $1.5 trillion USD traded daily, where does it go from here?
Online Futures Trading - Advantages and Disadvantages
What Is Online Futures Trading?
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