Dangers for a forex trader
101.000 Every trader who takes trading seriously from the outset carefully analyzes not only the methods of market analysis, but also issues related to risk reduction. In each transaction puts stop-loss and controls the volume of orders. And these are certainly the necessary conditions for successful trading. But the trader is waiting for other they have solved the forex. They may not know or simply do not make much difference to them.
Today I want to talk about what can result in an additional loss of funds in trading, except those that depend on the effectiveness of the trading system used and the discipline of the trader. I recommend you consider them in trading to improve your overall trading performance.
Spreads, set for each currency pair, is the broker’s source of income. However, some of them use so-called floating spreads. And so they can unexpectedly for the trader to pick up a significant part of the funds for the deposit. The fixed spread size for the most popular currency pairs is usually between 2 and 4 points. If you trade a full lot, the trader will lose between $20 and $40 on each trade. However, in the case of a floating spread, the spread can quickly increase several times. And then the losses will be counted not in the tens, but in the hundreds of dollars. Therefore, when choosing a broker, you need to immediately find out what type of spread is used.
Swaps are not relevant to those traders who trade during the day. But if you prefer medium-term trading, you should know that when you move your trading position the next day, you will have to pay for the swap. It is calculated on the basis of the size of the interest rates set by the central banks of the countries whose currencies are part of the currency pair.
One of the advantages of the foreign exchange market is its 24/7 operation. There is no trade on Saturdays and Sundays. However, on a weekend in the world there may be important and unforeseen events. And then on Monday on some currency pairs there may be a gap, the size of which can be in the tens or even hundreds of points. Offers left for the weekend will close on foot. Until then the price can return to the previous level and continue to move towards an open trade. To avoid such a development, you need to close all orders on Friday or secure the risk of the vulnerability.
Rect and slip
These trading problems can occur during periods of very high market volatility. Quotes change so quickly that the broker cannot meet the trader’s request to open or close an order at a certain Price. Makes a second request. This is what is called rectovot. For this reason, the right time to enter the market or fix profits may be missed. But there may be another situation. A quick change in quotations will lead to the execution of the trader’s order at a price that differs from the one given. It is not uncommon for prices to change for the worse.
Easity forex as I said in this article, do not pose a catastrophic threat to your trading account. But they can reduce potential earnings.
Record risks for Forex traders first appeared magazine for Forex traders | forex-for-you.ru.