| 17 comments ]

After discussing advantages of forex trading we should consider disadvantages as well:

1. Leverage

Today, you can leverage your investment with an online forex broker by 200, or even 400 to 1 and this creates tremendous profit potential. But it's a fact that most traders actually over leverage and lose.

With leverage you need to be very accurate with the execution of your trading signals and very careful with your stop loss protection. When trading on leverage if you are not careful, a quick equity spike will wipe your position.

In stock trading you can buy and hold and you only risk what you have paid for the stock and so long as it comes back you make a profit and you can wait.

In forex trading its different - you have losses that are open ended and they pile up quickly. You can't just sit back - you need to take action.

As most traders lack discipline, they very often hope a position turns around and don't have a get out point. A small loss soon ends up being a big loss and their equity is gone. Most traders hate admitting their wrong - they want the big profit potential leverage gives them but don't think about the downside.

2. Volatility

Forex prices are volatile and make big moves everyday - combine this with leverage and you have a powerful tool for profits which of course can also cause losses.

Most traders have no idea about how volatility affects their trading and how to deal with it. Most forex traders have never heard of, let alone understand "standard deviation of price" yet it's an essential part of any traders forex education.

You have to know what is normal volatility and what isn't, to have any hope of succeeding with your forex trading strategy.

Most traders make the error of placing stops to close to their entry point and they get taken out by normal volatility and this is because they are normally over leveraged. Most traders try so hard to avoid risk they actually create it for themselves.

17 comments

Sabahat Ali said... @ June 23, 2010 at 9:07 AM

Great post! yesterday i found another great post about forex Here is the link
Forex Trading Journal

pollito said... @ August 25, 2010 at 10:38 AM

Hola

Las Cuentas Gestionadas son una de las mejores opciones para ganar dinero en el mercado de divisas (Forex) ya que las administra un profesional.

Y se puede empezar desde un monto minimo (y no hablo de 10.000) en un Broker que esta regulado

Para mas informacion por favor ir a HacerFortuna.com

Saludos

gauriojha said... @ October 4, 2013 at 4:42 AM

Hi,
this one is great and is really a good post. I think it will help me a lot in the related stuff and is very much useful for me. Very well written I appreciate & must say good job.

Stock Tips

gauriojha said... @ October 4, 2013 at 4:44 AM

. This is the perfect blog for anyone who wants to know about this topic The article is nice and it’s pleasant to read. I have known very important things over here. I admire the valuable advice you make available in your expertly written content.
Nifty Futures Tips

epicresearch4 said... @ October 10, 2013 at 5:28 AM

the beneficial information we got from you and so unique…..

free stock futures tips

epicresearch4 said... @ October 10, 2013 at 5:29 AM

Useful information shared..I am very happy to read this article..Thanks for giving us nice info. Fantastic walk-through. I appreciate this post.



advisory forex tips in india

Epic Research said... @ October 31, 2013 at 5:00 AM

Thank you! I always wanted to write in my site something like that. Can I take part of your post to my blog?
Commodity Trading advisor

Epic Research said... @ October 31, 2013 at 5:03 AM

Very nice post. you are publishing very informative news for stock market .all news are very helpful.
Equity market tips

Sofiya Lim said... @ December 10, 2013 at 1:53 AM

Awesome info and straight to the point. I do not know if this is actually the best place to ask but do you people have any idea where to get some professional writers?
Forex Signals

Puneet verma said... @ January 13, 2014 at 4:35 AM

It was a awe-inspiring post and it has a significant meaning and thanks for sharing the information. Forex Trading Tips

Fendy Chia said... @ September 23, 2014 at 4:47 AM

I appreciate your effort, very know legible content i found here about Forex Trading Signals
it can be helpful.

Simran Roy said... @ February 23, 2015 at 4:24 AM

Interesting Article, very essential facts you shared with us. Everyone should read this valuable contents because it can be helpful. i would like to read more about Mcx gold tips and market updates.

Bhoomi Desai said... @ May 13, 2015 at 3:28 AM

I definitely enjoyed every little bit of Disadvantages Of Forex Trading tips - Bad effects of Forex . I have got you and saved as a favorite to look at new things you post.

Ram Katariya said... @ August 3, 2016 at 2:42 AM

Epic Research is a reputed advisory firm offering accurate Commodity tips and recommendation based upon the deep analysis and research on share markets.

Blogger said... @ September 9, 2016 at 2:21 AM

Hello Ya'll,

Below is a list of the most recommended forex brokers:
1. Most Recommended Forex Broker
2. eToro - $50 min. deposit.

Here is a list of money making forex instruments:
1. ForexTrendy - Recommended Probability Software.
2. EA Builder - Custom Strategies Autotrading.
3. Fast FX Profit - Secret Forex Strategy.

Hopefully these lists are benificial to you.

Rahul verma said... @ February 7, 2017 at 3:41 AM

Get Forex signals for Currency pairs, Commodities, Shares, Indices. All signals are highly accurate assuring good returns. Try free forex signals now. For trial give us a missed call at 080 3063 6424.

Laraib Malik said... @ July 19, 2017 at 1:08 AM

Only aspire to mention ones content can be as incredible. This clarity with your post is superb and that i may think you’re a guru for this issue. High-quality along with your concur permit me to to seize your current give to keep modified by using approaching blog post. Thanks a lot hundreds of along with you should go on the pleasurable get the job done. Forex Signals

Post a Comment