Main Principle Of Speculation – Fast To Close Losses And To Allow Profit To Grow.

This idea has come from the share market. By the way, never identify a share market, the Forex currency market and future. A lot of hardly noticeable at first sight nuances, but they – that also advance a picture entirely. It is not necessary to use instruments and the programs developed for the share markets (constantly appear “modern”), it is not only useless, but also often harms. And so, the share market – rather slow, is not enough volatile, the main thing – it hasn’t real sharp jumps, as on Forex (or, it is few). Who though about a week has observed for Forex, perfectly saw that the price moves jumps. The item upward, item downward and so long “shakes”, it happens for several hours. Then, suddenly, sharp jumps on 10 – 20 items within 5 minutes, and are frequent every which way (news left). And then everything calmed down. And then on the schedule – solid hour candles …

Is it necessary to use Stop Loss? – The answer is very simple – necessarily! Every opened position necessarily should be insured by stop. There is one unusual case when use of stops not necessarily – when you have very big deposit, capable is easy to transfer the floating loss to some thousand items. It is approximately 20 – 50 multiple overweight of the deposit over margin.

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Trading tactics without stops is not tactics, and the train of chaotic attempts – to try your luck. Time of a life of the deposit of such players is 10 – 15 days, before the nearest good movement.

How are people come to negation of stops? In the beginning the professional work the trader accurately executes all rules and insures the items. The account slowly grows or is at a stop. Very soon the trader notices that after operation of stop the market is developed in his side and it could take significant profit instead of the loss. Here the psychology plays with him a malicious joke, he does not notice that it happens in many cases, but not in all. And so, unsatisfied with slow increasing of the profit (promised that doubling of the deposit should be almost every month) the trader decides to refuse stops. But, in the beginning, he, understanding necessity of the insurance, simply transfers their installation far away. And all is normalized. It appears, it is necessary to sustain a little – and losses wonderfully turn to profit! Then it “catches’ the big stop eating a significant part of profit received earlier (but do not all deposit, and all the same, it is a very pity!) Or, on the contrary, long time the price does not approach to stops even close, and the trader decides that stops are not necessary absolutely. That’s all, he has stood on the road leading to ruin.

If stops, often working, lead to deposit reduction, it means that you have chosen incorrect tactics, instead of that stops are harmful.

And a unique method to work without stops is use of options. On a futures market – it is widely used. An essence of hedging by an option that purchasing an option, for example, for sale, you, as though, already pays in advance in the form of the award (a payment for an option) possible loss. And, while such option works, you can safely purchase (to open an item) for the sum of an option or smaller and safely to throw an item without any stops. If suddenly the price falls – your option will make profit, compensating losses from an open position. However, the option thus should be as it is possible more close to an opening price.

Before you make up your mind to make a forex investment or start forex trading yourself, better find a good forex book and learn more about the currency exchange market – this will save you from tons of troubles and traps.

Main Principle Of Speculation – Fast To Close Losses And To Allow Profit To Grow.

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