From the beginning, forex trading is a “high risk” business because it deals with markets whose movements cannot be predicted with certainty. Not surprisingly, many traders experience loss trading because they predict price movements wrong.
Trading profit is very possible to achieve. But to maintain it, not all traders can do. Instead of closing positions with profit, many novice traders experience loss. Additionally, there are some trading dangers that make your trading lose.
Check out 4 Trading Dangers that Threaten Your Trading Profit:
False Breakout
Breakout trading strategy is one technique that is much favored by traders in general. Ease of use is the reason most traders use this strategy. However, the traders also need to be aware of several things that pose a threat to profit trading. One of them is “False Breakout”. Why can a false breakout pose a threat to profit trading? When a breakout occurs at an important level, usually traders will speculate that new opportunities will be formed. However, due to False Breakout, the price reverses so that the opened trading position is in the opposite direction of the price trend.
Overtrading
The next factor that can be a threat to profit trading is overtrading or opening too many positions. As a result, risk management that has been made or agreed upon from the beginning is violated. Thus, the trading system that is run becomes chaotic and the profits obtained are also less than optimal.
Besides, overtrading can also damage your trading psychology. Usually, overtrading often happens to novice traders. They assume that the more open positions the greater the opportunity for profit. At first glance, this does look right. It is the beginning of a disease of trading that must be avoided. By being tempted to open many positions, the risk of loss is also higher. According to Daily Price Action, you should trade based on your daily time frame to minimize the overtrading.
Inadequate Trading Timing
One of the factors determining the success of a trader is to know when the best moment for trading. Open the correct position at the wrong time will make you lose. This is one of the things that is often overlooked by most traders, especially novice traders.
Basically, in forex trading, there are some of the most dangerous times for trading. At these times, achieving profit will be far more difficult because the market is volatile. With too much risk, of course, this will be a threat of profit trading. One of the most commonly used ways to find out the best times for trading is to use the economic calendar.
In the economic calendar, many economic data release schedules will be presented that can affect currency movements in the forex market. Thus, you can avoid market turmoil that can threaten trading profit. It will be better to play safe than have sacrifice profits for riskier things.
Currency Volatility
Trading on a pair with high volatility is like a double-edged sword. Sometimes it can be profitable, sometimes it can be a threat of profit trading. With high volatility, the opportunity to achieve large profits is also increasingly wide open. This is certainly very good, especially for the scalper.
Conversely, high volatility can also be a threat of profit trading. When a currency is volatile, its movements are very easy to change due to the sentiments of market participants. For novice traders, this is certainly very dangerous, because they are not ready to face market turmoil in a fast tempo like this.
On the other hand, trading on currency pairs with low volatility is also not good. Why so? When currency volatility is low, the movements do not show a definite direction and make it difficult to analyze. In essence, trading when volatility is high or low has its own risk
Those are the trading dangers that can make your trading lose. Thus, you should avoid them to maximize your profits.
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