Forex Trading Strategy: Looking for the best Forex trading strategy? Your search is over. Here’s the best I’ve found in over 10 years of trading, trialing and researchin. You may be wondering, ‘Why David Jensen write about the worst Forex strategy around?’
There are a couple of reasons:
First, to warn you about the worst Forex trading strategy, because it really does not want to end this system.
Second, because once you know the strategy Forex worst possible operations, which has been designed to maximize your losses in the long term, then you can invest to develop a strategy that does exactly the opposite.
With what you have learned from the worst Forex trading strategy, you will be able to create a system that will produce huge long-term gains. Cona worst Forex trading strategy I mean, it’s simply the worst Forex trading strategy I’ve found, it is known as averaging down. This strategy grisly operations Forex is the process of buying more shares that had previously acquired, as it lowers the price. Traders often purchase shares this way in an effort to reduce their initial entry price.
Only bad investors average down by buying shares of a sinking assests to decrease their overall average price per share. This Forex trading strategy is hardly ever effective, and is often like throwing money away. It also increases the loss of an operator if the rate continues to fall. Remember, just because one party is cheap now does not mean you will not get any cheaper. However, let’s examine how this strategy works devastating Forex trading. Say you bought one thousand shares at $ 40.
The novice investor may not have a stop loss in place, and the share price falls to $ 30 dollars. Here comes the stupidity of this Forex trading strategy – to average down the novice trader can buy for another thousand shares at $ 30 to lower the average cost per share acquired. Therefore, your average cost per share would now be $ 35.
Unfortunately, the share price could fall further, and the novice trader again buy more shares to reduce the average cost per share. He just bought more and more shares and lost their money.
Now, imagine this Forex trading strategy applied to a portfolio of assets. In the end, all the capital will automatically be allocated to the assets of worst performance of the portfolio, while the best performing assets are sold. The result is at best, a low disastrous performance compared to the market.
If a trader uses an average of the system and uses margins, their losses are magnified even more. The biggest problem with this strategy is that Forex trader gains are shortened, and the losers are left to run. My advice is to never measure down. The process of buying a share, watching falling, then throw more money at it in the hope that it will get back to break even or make a bigger killing is one of the most misguided advice on Wall Street pieces . He never face a situation where you wonder: Should I risk more than initially expected in a desperate attempt to lower my cost and save my butt?
Instead, design a simple, robust system with good money management rules. I can practically guarantee the results will be better than averaging down.