Optimal profit or maximum loss in Forex trading?
The lure of big profits is one reason why many people look at the capital market to try trading. How not, once you make a profit you can get 10% to 20% in a short time. The lure of big profits, without realizing that many people are directly proportional to the risk of losses that occur as well. This risk is often forgotten by many people so they can easily invest their capital without calculation.
When viewed that the strengthening of currencies in a country, suddenly immediately invests all capital owned. Guess that the value of a currency that is crowded / is rising and hope that value will rise to the maximum extent without using capital strategy and management. When the value of the currency reverses direction they tend to expect tomorrow to rise again. So it’s no wonder if you will find many beginner traders who directly invest up to hundreds of dollars with the hope of being able to get a double profit.
There are 2 causes for this:
First: The trader does not want to lose / Cut Loss or Stop Loss when the value of the currency or foreign currency falls. Lots of traders who ignore Stoploss levels in forex trading activities. Even when touching the StopLoss level the Trader does not want to sell or sell because it hopes that the price bounces back and can sell in a profit position. But what happens is the opposite of the traders’ expectations. The value of the currency actually dropped even deeper. At a time like this, the trader said “it’s okay to calculate investments”. But what is unfortunate that the purchased currency is a value that is not worth the investment. The longer it is held, the value decreases the price. This is the first thing that often happens to novice traders.Also note, the value of a currency can suddenly rise and fall. There are many factors that influence it.
Second: Traders do not want to buy when the currency price has gone up by tens of percent and expect the increase to reach 25% more without any logical reason. Many novice traders do not understand / do not have a trading plan regarding the target market and do not make profit taking. They tend to still have a sense of doubt and confusion. When profit, the trader who was 10% to 5%. they say “Why don’t I just sell it, yes, I will later if I increase to 10% again I sell”. While hoping the price will turn back to the price where they profit 10%, but the opposite is true, the expected price rises even further decreases and finally the one that was fortunate now becomes a loss. And this also causes the trader to invest excessively.