Part 2. Useless Forex Tips

Internet pages are littered with tips for novice traders. One gets the impression that everyone wants to share their knowledge and skills, offering dozens of recommendations. True, Forex advice comes down to psychology (not taking risks, diversifying risks, not giving up, etc.) and general instructions on trading strategies.

Of course, it is worth listening to them, but with an eye on a couple of points:

  • All traders are different and everyone has different approaches. There is no single recipe for behavior. It is logical that it is impossible, for example, to use credit money. But right there, for some reason, many use leverage.
  • Most of the articles with recommendations are written for key queries in order to increase website traffic due to growth in the search engine ranking. They are written by copywriters, who did not closely engage in trade but only rewrite texts from each other. Therefore, in most cases, the recommendations are the same, although they are written in different words.

Therefore, I would like to focus, on the contrary, on the useless advice of Forex. That is, those that can often be found on the Internet as recommendations. It is noteworthy that they are considered useful, although the question of their usefulness is controversial. So:

  1. “Do not turn profitable positions into unprofitable ones. Upon reaching positive values, move the stop to the breakeven level and then move the stop behind the trend. ” At first glance, everything is correct: the position needs to be defended. But at some point, this strategy reaches the point of absurdity. A trader begins to insure with a stop even a small profit of 5-10 points, after which the deal is knocked out in the stop due to volatility, although the direction of movement remains. The definition of the minimum profit will be correct here, after which the trader should put a stop at the breakeven level. And its length will depend on volatility, trading time and other factors.

An auxiliary tool can be a trailing stop. This is a kind of stop-loss that follows the price in the main direction but does not roll back when it is reversed. In classical strategies to achieve the target level of profit (take profit), close 50% of the position, the remaining 50% is fixed by trailing at the breakeven level (that is, the length of the trailing is the distance from the opening point of the transaction to take profit). True, it is worth remembering that trailing is placed in the terminal (platform), and not on the broker’s server. In the event of a disconnection from the server (Internet), it will fly off.

  • “Work only in the trend.” In general terms, strategies can be divided into two parts: according to the trend and against. Almost all recommendations for beginners come down to the rule “Trend is your friend”, that is, trading against the trend is a mistake. And now two points:
  • Trend trading. If the price is steadily rising or falling, it would be illogical to open deals in the opposite direction. Practice shows that the more the price grows (for example, it is a growing trend), the more people want to “quickly cut” money on its growth (that is, an entry in the direction of the trend).
  • Trading against the trend. These are transactions opened at the time of a reversal in order to catch the beginning of the reverse movement. An interesting fact: when the price goes up, the trader has the thought: “But the price can’t go up forever, so there will be a reversal somewhere.” And the longer the price goes up, the more traders appear with this thought.

In both points, the opposite things are expressed, however, found in practical trading. The only question is what strength in the current situation (“bulls” or “bears”) will be more powerful. Any bubble will burst sooner or later, and any attempt to enter the market according to the trend may be belated. On the other hand, the entry against the trend may be too early. Or, on the contrary, it may turn out to be timely contrary to the recommendations of “professionals.”

Conclusion: the recommendation is more than stupid because the situations are different. If trading in a trend is to “jump into the last car of a departing train,” then this is the path to lose. Large professional capital enters the market at the very beginning of the trend and, conversely, at its peak “cuts off hamsters”. If a trader really sees a strong trend, then you can work on it. Similarly, trading against the trend: if there is an understanding that a reversal will soon come, then why not open the opposite trade? “Feet, wings … The main thing is the tail!

  • “Analyze at least two sources of information. For example, patterns and news. ” For a novice trader, this advice in Forex will only do harm. Classic patterns work in 1 out of 10. Fundamental analysis is completely dangerous.
  • “Take profit length at least 2 times higher than the stop.” All market situations are different – and the binding of the stop to take profit is at least strange.
  • “Stop trading if there is emotional arousal (euphoria, depression, etc.).” It seems like a piece of reasonable advice because at these moments on emotions you can make a mistake. But if a person is a professional, then emotions, on the contrary, spur him on. And if a person is mistaken in moments of irritation or not confident in himself, then he should completely abandon trading. Therefore, in this frequent meeting of advice, not everything is so simple.
  • “Do not be afraid of the foreign exchange market, risks and losses.” Here it is worth recalling the phrase: “Do not think about the white monkey.” The more a trader reads tips that you should not be afraid of or worried about something, the less he has a desire to get involved in trading altogether. There is only one recipe – read less all sorts of Forex tips and stuff bumps empirically. Understanding the principles of trade will come with time.

Most of all harmful Forex tips are given by free courses of dealing centers that are simply not interested in their students (potential customers) being successful.

Leave Comment

Your email address will not be published. Required fields are marked *

Enter Captcha Here : *

Reload Image