Why your next trade is independent from your last trades result - forex trading free demo

Why your next trade is independent from your last trades result ~ forex trading free demo

Do not rush to close that open trade before reading the whole of this article. Not always do titles give the complete overview of the subject matter of a piece of writing. The same can be said of the forex market. Not always does the analysis reveal the true nature of the market sentiment. That is why every trade is always a loss waiting to happen. I want you to start approaching your trading of forex with that idea at the back of your mind.
You may be so confident about the set up you are about to trade, but confidence alone is not immunity from the invisible hand of the forex market. Anything could happen between the time you enter the trade and the time you exit. Someone may hijack a plane mid air and crush it on a tower in a busy world capital. The significance of that to the markets cannot be over emphasized.

The website of an important world organization may be hacked into and some not so good news left behind sending investor confidence the other way. It won’t matter that you had traded your strategy; you will lose on all your open positions. A nuclear disaster could happen in an economically thriving part of the world. That too could send the markets in disarray. Every trade is a loss waiting to happen. And the bad news may just come when your trading platform has frozen thus making it impossible for you to exit the trade. It won’t matter that had the trade station been active you would have closed your open position- you will lose some money.

There are very many things about the forex sphere that are way within our control. As traders, whether fundamental or technical gurus, we are not gifted with prophetic eyes that may peer into the future and see all disasters waiting to happen. Of course we don’t pray for disasters to happen- majorities in fact do pray that disasters should not strike. Nevertheless disasters have to strike. At times they are nothing but a false alarm but which still have greater impact on the markets.

This should not mean that we cannot or should not trade the markets; it only implies that we should not over emphasize the importance of a single trade. Why should you over leverage and disobey the rules of position sizing when there is still a possibility that the trade you are about to take could end up as a loss. What is the need of using tighter stops when it’s clear to you that some false alarm created by a hacker posting on a news website could cause the markets to tumble and stop just at that point that you had your stop? Had you used a more liberal stop you would still be in the trade.

Every trade is a loss waiting to happen unless it is closed with profit or at a break even point. In technical analysis you will learn about false set ups- those that signify a fall yet moments later the currency is still rallying and those that signify buy yet moments later the currency breaks to record lows. You may say- but the moving average and that other indicator were all in agreement with my analysis, it doesn’t matter. The trade is a loser despite the plethora of setups and the backing of signals.

To further understand why I insist that every trade is a loss waiting to happen you can read an article I wrote a while back stating that what is to go wrong will go wrong. So before you opt to use more leverage than you should or before betting your entire account capital on that one trade, remember that every trade is a loss waiting to happen. And that one trade could lead to a margin call. A single loss should not wipe out the gains you’ve accumulated over a great deal of trading hours. I hope that you now know why every trade is just another loss waiting to happen.

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