Greed Can Force The Remote Forex Trader Into An Early Retirement ~ forex com api trading
I recently found an interesting article about currency trading and greed. Athor makes few good points so i think it will be good to read and reread it.
In the markets, greed is often a good thing. It is what drives companies to perform well, and what drives much of the markets movement. It’s the effort that the remote forex trader will expend trying to make a profit that creates the market movement that enables you, as a remote forex trader, to succeed.
The desire to make money is what motivates a remote forex trader to become successful. But the desire to succeed is different from the desire to get every bit of possible profit from a trade. This kind of reckless greed makes a remote forex trader hold on to their position long after the downside has started to outweigh the upside, until risk outweighs potential reward.
Heres an example: a remote forex trader sees that a particular stock is starting on a run; its reported good news and is already up 20% for the day. The volume is still building; its stable at the current price; the market is rallying strongly; and it looks like it will go higher. The remote forex trader buys 1,000 shares at $6 a share. By 12:15 P.M., the stock has raced up to $10 - a gain of over 66% for the day, and a profit of $4,000 on 1,000 shares.
This remote forex trader knows that round number price points, like $10, are psychological barriers for the remote forex trader and that if a stock is going to stop rising, it will probably be near a point like this. As it turns out, after momentarily shooting to $10.03, the price stops rising and starts to go down.
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