Many believe forex is a money machine that can generate continuously. If this was true there would be many millionaires in this sector. Despite the countless help, one still struggles to make a profit. Frequently people undertake great trades but not all of them are successful. Due to immense greed, wrong decisions are implemented. It has been discovered traders often use risky strategies although the danger is known. As they want to make a fortune quickly, this urge soon overtakes pragmatic thinking. The result is a horrible performance and the worst case is losing capital. If you are wondering why a person should not undertake risks, this is the right place for you.
This post will clarify why exposing investment to danger is not a great idea. Initially, this seems inevitable because investors need to cope up with the markets. However, after a few months, they realize countless ways to trade. If you have a commenced career recently go through this article to understand this situation in depth.
Invest your idle money
You must be investing the idle money to ensure a high level of comfort. People are who are not investing idle money lose as they are under heavy stress. But having idle money is not enough. Visit Saxo capital markets to get more knowledge on investment business and this should give you a strong idea of why trading has become so addictive. Just because it’s an addition doesn’t mean you will be winning most of the trades. For your safety, you have to follow a strategic technique just like a top trader at Saxo.
But every decision is risky
This sounds logical when we take into account this phenomenon that investments are subject to market risks. However, there is one catch. One should not take unnecessary risks when he has solutions to go systematically. For example, don’t go for choppy movements even if they appear appealing. Volatility is expected but an excessive amount is detrimental to fund. A trader in Hong Kong has the freedom to invest only a few dollars to committing all his money. This depends on the individual and without taking the right decision, one can never succeed in stock trading.
Look at the professionals and this will give some ideas. Despite handling millions of dollars, they are still profitable and only take the least risky orders. This explains the consequences of wrong decisions that can give on a career once a person starts taking risks.
My capital is exposed every time a trade has been placed
This is true but the ultimate formula depends on the investors to divide their fund. From 100 dollars account, only a few dollars are committed while trading, not the entire deposit. Similarly, only risk a small percentage of capital. Many suggest following the 1% risk strategy which implies endangering a maximum 1% of the account. There are debates ongoing and we will not go into details. Don’t select the risky ways to invest but choose a safe method. This may seem lengthy or mundane in the process but the money will be safe.
Big targets require a big sacrifice
This is a dilemma when investors aim for a substantial profit. There are two probable outcomes of such decisions. Either the trade is successful or they suffer losses. To mitigate this impact, we advise using a strict risk to reward formula. In case you lose this will ensure the account is safe. Still, threats persist and small, consistent gain is advised. Instead of making 10 dollars on one performance, make the same amount in multiple trades. This will lengthen the process but will save the balance from draining out.
What about leverage?
The best solution is to never implement this tool because it offers more complications than advantages. Beginners often get mesmerized and the wrong usage of advanced tools get themselves into hot water. Only focus on developing skills and be practical leverage is not an ultimate solution.