A typical mistake that traders make is attempting to tackle too many positions without delay.
They imagine that a better variety of positions will translate into higher profit. “If I open positions in multiple pairs, one among them will win big.”
Too bad this sort of considering normally leads them to lose big as a substitute.
Sure, it’s tempting to leap on ALL the bandwagon and hit all of the meme stocks when your mates, trading heroes, and online trading groups talk in regards to the same 15 assets.
But when you ought to maximize your opportunities and skills, it is advisable to take into consideration being pickier together with your trades.
For one thing, opening multiple positions dilutes your capital allocation.
Once you’ve done your research and are confident where price goes, wouldn’t you ought to put as much as you may risk on the trade?
Don’t undercapitalize a 20% move simply because you wanted in on a well-liked asset that may only grow by 10% in the identical time period.
Taking over too many trades also means you’re spending less time and research on each position.
As an alternative of skimming charts and tweets on eight assets, you could possibly do multiple chart evaluation, backtests, and seek advice from informed sources about where three asset prices could go.
The more information you could have and the more scenarios you’ve prepared for, the less likely you might be to miss opportunities and make emotional decisions.
Finally, having a whole lot of open trades weakens your focus.
You may only realistically deal with only a small variety of opportunities, so preparing for EVERY SINGLE market scenario won’t do a thing to your account should you’re not around to execute the trading plan once they do occur.
At the top of the day, it’s our job as traders to get the utmost yield for the capital that we’ve.
While being picky with trades won’t guarantee consistent profits, it will probably definitely minimize losses and hopefully keep you within the forex game long enough to be consistently profitable.