How not to trade on Forex – advice for novice traders

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Hello gentlemen traders! Today we will talk about techniques that are best not to use in your trading, especially if you are a novice trader. If you use them, then you need to fully and completely understand what you are doing, and what consequences you may expect. We want to warn you in advance that all our recommendations are aimed more at novice traders, since the described techniques are potentially dangerous for Forex trading . Experienced traders can use them at their own risk.

Prohibited techniques in trading

Содержание статьи:

1. Trade without stops. As you know, stop loss is the limiter of your losses. When opening a position, it is imperative to set a safety stop loss. If you do not, then you have an increased risk that you will lose your entire deposit in one trade. Trading without stop losses is very popular with novice traders. When a trader comes to Forex, he begins to set stop-losses according to the principle: “how many it is not a pity”, and after a series of stops is triggered, analyzes his failures and understands that if he traded without stops, he would already be in a good plus. And he starts trading without stop-losses, but, as a rule, this does not last long. Some powerful movement is enough (for example, news release) and you can say goodbye to your deposit. There are also strategies that do not involve stop losses. But using such a strategy is tantamount to its absence, since one unprofitable position will nullify all profitable trades, as well as the deposit itself. Of course, you can trade 0.01 lots with a deposit of $ 50,000, then you are not afraid of any movements against you, but believe me, no one with such a deposit trades without stops. On the contrary, traders make informed decisions when opening trades and trade only using protective orders;

2. Martingale. Martingale systemIs not some kind of secret strategy or tactic, but just a way to manage money. The meaning of Martingale is that if the previous trade was closed with a loss, then the next position should be opened with a large volume. Moreover, each new trade must also be larger than the previous one, until a positive trade appears and a series of losses ends, then you will again return to the original trading volume. At first glance, especially for inexperienced traders, this approach to trading seems like a godsend. It seems that there cannot be more than 10 losing trades in a row, no, no, and one winning trade will slip through, thanks to which you will remain in the black. However, even with the most working strategy, there may well be 10, 20 or even more losing trades in a row, and your deposit simply will not withstand such a load. The Martingale system only works if you have an unlimited deposit. Just imagine, if you started with just one dollar, then at the 10th step it will already be $ 1,024, that is, you need a deposit of several thousand dollars to recoup past losses and earn this single dollar;
3. Averaging. The idea behind averaging is to improve the entry point. For example, you entered a buy, but the price moves against you. In theory, you should have closed the trade by stop loss, but instead you open another buy trade at a lower price. Thus, to enter breakevenyou don’t even need the price to return to a zero position, you can close the trade much earlier. If the price continues to move against you, then you open new trades against the trend, gradually shifting the breakeven line, so a small pullback is enough to break into zero. And if you also use Martingale, you can also make good money. The disadvantage of averaging is that if the price moves too far from the opening point, then you may not have enough deposit to withstand all unprofitable positions, which will grow like a snowball;

4. Locking. What is the meaning of this technique? For example, you opened a sell order, but the price began to rise, and instead of closing the trade with a loss, you open a buy order. That’s it, now your loss is fixed, and wherever the price goes – up or down, your loss will remain the same. This is a great discovery for a novice trader, because now you can trade without stops, and at the same time limit further growth in losses. But what’s next? Opening a lock (“lock”) and staying in the black is very difficult and only an experienced trader can do it. In fact, you will have a loss on your deposit, for which a negative swap will additionally accumulate. Read more about locking here ;
5. Pipsing for the entire deposit.How can you make money quickly on Forex? You can either enter a trade with a small volume at the beginning of the trend in order to get tangible profit at the end of the movement, or enter the trade with the entire deposit, closing it in a couple of points and getting 30% profit for one trade. You can say that you are using this strategy only in order to slightly accelerate your initial deposit, but it will not lead to anything good. If earlier such a strategy was still successfully used by traders, for example, at the Asian trading session, when currency pairs were less volatile, now this trading method no longer works;
6. Maximum leverage.Newbies in Forex often have many questions about leverage. Now we will dispel all myths regarding the use of leverage. First, leverage does not affect the pip value. For example, the cost of a EURUSD pip for a volume of 1 lot is $ 10. No matter what leverage you use – 1: 100, 1: 500 or 1: 1000, the pip value will not change. By using leverage, you can simply open more positions. If you have a position volume of 0.1 lot for $ 3,000, then you absolutely do not care what your leverage is, because you still will not open more than 0.1 lot. Secondly, if you use a lot of leverage, then you will have less margin and more free funds. Essentially, leverage allows you to open a larger volume of positions. All the evil from leverage is that you, having $ 100 on your account, open a deal with 1 lot with the support of a leverage of 1: 1000. Of course, if you guessed the direction and the price passed 10 points, then you will immediately earn 100% of your deposit, but if you were mistaken, then 8-9 points are enough (taking into accountspread ) against you so that you lose your deposit;
7. Trading on the news. Even five years ago, one could very successfully make money on news. Traders usually placed pending buy and sell orders a short distance from the price, about 15 minutes before the news came out. But today’s reality is that news doesn’t have much of an impact on the markets. The price usually starts to fluctuate back and forth, and it is very difficult to predict the movement. There are literally 2-3 economic events per month that can significantly affect the market situation, for example, Non-Farm ;
8. Indicator trading.Now we are not talking about the fact that you cannot trade using indicators, but about the fact that you do not need to use ten or more indicators on the chart at the same time. Often, traders do not even understand indicator signals or use several indicators of the same type, for example, three oscillators . Therefore, if you want to trade using indicators, then use one trend indicator and one oscillator, depending on the market situation and do not need to clutter up the chart with dozens of technical instruments, since they all show approximately the same information with small delays;

9. Counselors. It is necessary to understand that all those advisors, which are freely available on various forums, are not able to trade in a plus and make you money. Perhaps they once brought profit, but now the market has changed so much that without additional optimizations, the advisors will not work. And then you don’t need to think that a trading robot is some kind of superintelligence that makes decisions for you, it is just a trading algorithm that automates a manual strategy. What you or someone else put into it, then it will perform. Whether it is worth buying advisors is another question. On the one hand, the developers of the advisor usually provide reports and real monitoring of accounts, as well as monitor the timely updating and optimization of trading experts. On the other hand, a fair question arises – why sell the EA? if it really makes a profit? Better then put it onPAMM account , if you do not have initial capital, and let it work. Often, advisor sellers make money not on automated trading, but on the sales of these advisors, and the trading robots themselves use Martingale strategies and averaging in their algorithm, which is why the monitoring is so beautiful;
10. Analytics.Novice traders, who do not have a clear strategy of their own, like to rely on someone else’s opinion. They say analysts and financial experts should be smarter than me, otherwise they would not be published in prestigious news agencies. However, this is not yet an indicator that, following analysts’ forecasts, you will always be in profit. Even if we compare all the leading analysts, it may turn out that half of the forecasts for EURUSD will be for selling, and the other half for buying. Here you also need to look at what strategy the analyst uses – long-term or short-term. If, according to the forecast, you can lose during the day, then the analyst, according to the same forecast, will work during the week. Therefore, do not read the forecasts of “experts”, trade according to your strategy, pay attention only to the calendar of economic news .


Once again, we want to emphasize that the tips described above, how not to trade in Forex, concern more novice traders. If you have trading experience, then you can combine Martingale and averaging tactics, use locking instead of trading without stops, scalp or use trading advisors. However, you should not rely on any forbidden technique as an independent strategy. You must understand that Forex trading is not a sprint, but a marathon. If with the help of Martingale you manage to earn something within a few months, then in a year or two you will still merge, but the losses for you will be already more impressive than at the initial stage. No need to try to find vulnerabilities in trading, as a cheater does in a game, trade using your trading system, let it bring 5-10% per month. Yes, this is a small amount of money, but in a year it will already be about 60-120%, which is not bad.

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