Why Often Trading Does Not Guarantee Profit Consistently?
Why Often Trading Does Not Guarantee Profit Consistently? – In forex, not only the quantity of open trade is preferred, but also need a quality trade. Often doing open trade without doing proper analysis will not lead traders to high-profit positions, but vice versa. Too often open trade will make the burden of trading costs increasingly bloated can even interfere with the emotional mind of the trader itself.
Basically when a trader opens a trading position then the capital as collateral that we have will be exposed. From the whole trading process, there are only two possibilities for each trading position that is to gain profit from the accumulation of positive points or losers due to the accumulation of negative points.
Consider the illustration below!
Mr. Kong opened five trading positions on several major pairs daily for a week. Mr. Kong ignores the position that goes without Stop Loss at all. Analogously, Mr. Kong’s initial capital is $ 1,000 in a mini account with a 60% Win Rate and a maximum Leverage of 1: 200.
Under the Win Rate, Mr. Kong’s glimpse should benefit. However, when traced, after 1 week of trading conducted by Mr. Kong even generate losses with the following details.
Number of positions closed: 25 positions (Mr. Kong is not trading on Saturdays and Sundays)
Profit position with sum: 15 position result of 60% number of closed position.
Amount of loss position: 10 position results from 40% of the total number of closed positions.
Gross profit: 150 pips (Average profit perposition range 10 pips).
Due to Mr. Kong who never use Stop Loss, then the average loss of Gross profit with 20 pips per position is 200 pips.
The above calculation shows after one week doing daily trading then Mr. Kong loss 50 pips or equivalent to 50 dollars and not accumulated with the burden of trading costs. In essence, the greater the opening of the position then the greater the risk of trading too. From the illustration is clear if often trading will not guarantee consistent profit Raihan is not it?
Not only up there, if you often trade though with a large Win Rate but some things that create the following losses you can also experience.
1. The emergence of Potential Stress
It is natural that if a trader opens a trading position, he will be forged anxiety due to a decision that has been taken. If one trade alone makes anxiety, then what happens to those who often open trading positions? Of the anxiety experienced several times emerge from the rare trader. Excessive worry can lead to the emergence of potential stress. Your time will also be wasted because often check the chart to make sure your position is safe. As a result, traders will fall into the practice of Overtrading because they want to continue to repay the position of loss. If this is left continuously then traders may be depressed.
2. To Prohibit Profit Consistently
If your goal is to get a consistent profit, often trading is not the right way. Consistent profits will instead arise if the trader is patient for the great benefit of the existing strategic trading positions. You must be patient to wait for confirmation signal with high accuracy before open position. You only need to do market order after the price is at a certain level according to the confirmation signal.
Currently, you already know if trading often will be bad, not only on the assets you have but also yourself own traders. But if you are one of the traders who has practiced trading activities with the intensity of this meeting here are some things you can do to overcome the habit of trading often.
Change the way you think, from what was believed to be frequent trading then large profits into consistent profit does not come from the number of open positions.
Reduce the desire to open a new position before reaching a profit target or hit Stop Loss.
Use the Money Management analysis to manage each position.