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Forex day traders are an adventurous lot. These high-level forex traders are most capable of the largest sums of profit while at the same time most prone to the greatest of losses. This is the exact reason why day trading is not really the top choice for most traders. The risks are simply too substantial and not everyone has the guts to actually face them. If you are a day trader and is currently soaring in this elevated trading arena, here are some things you should definitely avoid:
Averaging down
It has been a long-kept trading dogma that it is best to buy stocks once the prices go to the bottom of the barrel hence it is also smart to lower stock prices once a considerable loss is projected. This prospect would allow traders to minimize the amount of money that might go kaput. The problem is that this could easily backfire and create greater loss known as the margin call. Especially for Forex day traders who are given less trading hours, it is best to abandon negative trades and instead maximize whatever opportunity is presented.
News anticipation
Traders are typically equipped with the ability to foresee stock market news indicators. Day traders specifically are prone to this method. It is important to note though that overuse of market foreshadowing could eventually result to more losses as opposed to gains. One could never accurately predict how the market would react to a particular news hence it is best to be on the safe side and wait for things to happen before making the move.
Post-news trading
It has been a culture for Forex day traders to immediately respond to stock market news indicators by devouring all possible trading opportunity. Doing this without a proven and tested concept could only breed disaster. The volatility of post-news hours is quite high therefore the risks during these trading moments are greater than usual.
Risking more than what is appropriate
Forex traders who risk more than one percent of the total trading capital are bound to suffer unimaginably loses.
Unfounded expectations
It is acceptable to expect great things to come but it is not acceptable to solely rely on these expectations. It is important to understand the volatility of the trading market and the flux inherent to the entire system. That said it is best for traders, especially for Forex day traders from whom much is demanded, to always stay level-headed and logical.
