One good trade could make you a lot of money, however persistence may possibly generate huge amounts of money over and over. The profitability of consistency involves two levels: the first is the consistency of your strategy, and the second is your consistency in following through with your strategy. In these foreign currency exchange trading tips you will understand how the power of being consistent can produce amazing results for you.
Do not Back off From Successful trading strategies:
What do all winning strategies share? Most will produce losing trades. With a winning strategy at your fingertips, losing trades put you just one step closer to a winning trade and likely a series of winning trades. Letting loose of a strategy after not very many missteps is among the most common, and the most detrimental, mistakes that a trader could take. Casting aside what works in the long-term for temporary success ensures many long term failures.
Persistence Enables you to take advantage of the power of Compounding:
Even Albert Einstein, arguably the most wise man to ever live, was amazed at the power of compound interest. In his writings, he compared compound interest to one of the Seven Wonders of the World, denoting that compound interest should be the eighth wonder.
However, opening the power of your trading strategy to compound interest requires more than just one winning trade; it requires many more winners than losers. This is where consistency comes into play. An investor that can produce one 500% trade and after that never win again will not create near the sum of wealth of a trader who can produce 20% time and time again.
Automation Brings Consistency:
One reason why automation is so favorite among traders and institutions alike is its ability to draw profits consistently, day after day, week after week. Computer models know hardly any boundaries; to a computer, $1000 is only a digit, while humans perceive $1000 as two car payments - which sets off the irrationality of emotion. By eradicating the emotion of high-stakes trading, along with the sloppiness of manually performed orders, computer models can derive earnings that better fit with the economic analysis of a selected trading strategy.
Aim for Consistency First and Profitability Should Soon Follow:
The main sole reason 95% of first-time Forex traders fail is due only to their inconsistency when trading. With minimal comprehension of money and risk management, coupled with acting prematurely to any market developments, new traders will see their portfolios wiped out with high leverage and expensive spreads. Having said that, seasoned professionals are already pushed to a level of success only by their consistency to produce profits in every trading climate.
Leveraging Reliable trading strategies:
Back-testing a strategy for its largest possible drawdown helps investors to take full advantage of consistency. If your strategy results a worst possible drawdown of 10% of the account balance, you could leverage up every position by a figure of 9, enabling massive gains, while simultaneously preventing your account from ever being ruined.
While this is the hypothetical argument, traders should opt for much reduced leveraging potential, utilizing only half of what the theoretical would project. All in all, constant traders have a leniency and number of benefits over the sporadic Currency exchange newbie.
More foreign currency exchange trading tips and techniques on upcoming articles.
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