Can Reddit offer anything to traders?
could possibly be the value of advice from an online forum like Reddit? The
subreddit, not only features success stories but horror stories of forex
traders “blowing” their accounts in a myriad of ways. It’s like being privy to
an extensive trial and error process (most traders experience), without
actually putting your own investment on the line.
A further benefit is
that most of the commenters on Reddit are or where active traders and have
experienced the pitfalls and advantages of trading. Subreddits are also
regulated – so sales comments or marketing materials are usually deleted. So, most
of the points you’ll find are unbiased, advice by traders for traders.
Where to get the news
of Forex related info. Some other commenters mentioned Twitter as a great
source for concise real-time information – a piece of advice we gave in our
article about looking beyond
trading subreddit, one that seems to consistently show up is the new trader that decimates their account
by overleveraging. If you are unfamiliar with the term it’s when a trader uses an
ill-advised amount of leverage to open a position. Why ill-advised? Because a
very small adverse movement, would close out the trade – or even multiple
trades due to margin stop out.
overlaps with the advice above, overleveraging increases your exposure, also
known as risk. Managing this variable when trading, according to most
institutional, retail and reddit traders – is key to protecting your
investment. This includes using stop loss to set the maximum risk you are
comfortable with and attempting to restrict your risk to 1-5% of your total
account per trade.
point made by the Forex redditors is – in the above vain, stop-loss defines
position size, not vice versa. This is frequent reversal made by new traders
which focus on their position size and potential gains, instead of their
Revenge Trading – Don’t Do It
when trading is very dangerous. Having a trading strategy and sticking to it is
an extremely effective method to manage risk – the inverse on the other hand is
an extremely effective method to lose all of your investment.
If you proactively
try to recover your losses immediately after losing, then you are going to be
in a world of pain – or at least your account is. It is very important to detach
emotions from trading.
Greed, fear, anger and pride (which seem like biblical
cardinal sins) are in fact emotions that can influence and cause traders to make
all of the advice on the internet, keeping a trade journal is something that is
surprisingly under represented. With all the variables involved having a
baseline that you can revert to is extremely valuable.
The military looks at
past campaigns for strategy, athletes look at play backs of their past games to
avoid their previous mistakes, become more efficient and ultimately better at
what they do. What makes you think traders couldn’t benefit from that?
Forex trading is all about timing. Markets are
their most volatile during opening and overlapping times, after policy changes
and announcements. Sometimes you need some time for volatility to normalize and
see what trends are emerging, other times volatility is beneficial. But most
new traders are eager to trade and trade on impulse, which is never a good
Stick to your plan
in trading lingo, stick to your trading strategy. Having a strategy in place
covers your risk/reward ratio, your risk management strategy and the types
currencies you’d like to trade. A side-note here – you are not married to one
strategy and no one strategy is gospel. Those that adapt, survive once said an
old British chap named Darwin. The same holds true for traders on the market.
Although there are
many different ways to approach trading, and as many different trading theories
as there are stars in the sky, one thing that is a given is; knowledge is king.
Sometimes that knowledge comes directly from the source – traders like you on