Some of the reasons why traders leave their
tried-and-tested trading plans are due to their newly found information that
contradicts their original bias in trading. What happens is that they lose the
confidence they need on their original trading plan. This strategy,
unfortunately, will not work well if you use the new information at the same
time frame that you used on the original trading plan.
The key to a successful endeavor in Forex
Trading and Forex Broker in Germany is the
expertise that traders acquire through experience. There are two groups of
expertise in Forex Trading – long term and short term trading.
Short Term Trading (Scalp Trading)
Short-term trading, also known as scalp
trading, is a well-known trading strategy that is characterized by short
periods. It is fast, exciting, mind-rattling, all at once. This style of
trading can only last for seconds to minutes. The main idea of this trading
style is to take as many pips as you can throughout the time of the day wherein
the market is the busiest.
Scalpers can have as much as a few hundred
trades every day, aiming to acquire small profits. At the end of the trading
day, all of the positions will be closed. Scalpers need to stay tuned in the
charts, therefore, this style is only applicable to traders who can spend hours
of uninterrupted trading. To be successful in this trading style, you need
intense focus and fast thinking.
Long Term Trading (Position Trading)
Position Trading, on the other hand, is the
longest term trading with trades that can go for as long as a few months to
years. Position traders involve profiting from longer trends. Position trading
resembles investing with the markets outside forex as the only difference they
have. With position trading, you need a good understanding and patience as it
goes for long and fundamental themes.
Additionally, with this type of trading, it
is expected that your stop losses will become really large but your profit can
also turn out to be huge. You must also ensure that you are well-capitalized or
risk getting margin called.
The problems are expected to arise when the
information processing systems of long and short term trading get mixed up. If
they enter a trade with the use of a single set of parameters but end up using
the information of the other information processing then the mix-up could hurt
your trade. This is the reason why some traders tend to miss out on getting a
good trade.
How to Avoid Mix-ups
One of the most effective ways to avoid
mix-ups is to handle the trade through the use of the process used when locking
your trade idea. Another way to avoid mixing the two types of trading is thru
the use of detailed trading plans. Lack of confidence in your original plan is
the reason why most traders get shaken up with small losses. But if you
research more on Forex Trading and Forex
Broker Germany, you will be confident with your game plan no matter what
happens.
