Majority of the new traders start their trading career based on short term trading system. They choose it due to the ease of maintenance of a short term trade. On the other hand, traders also prefer to win short term profits. In the real trading business, they experience the exact opposite of their expectations. They cannot ensure a proper money management plan. The lots stay big for the trades. Some even think of leveraging the investment with a 1:100 ratio. The rookie traders fail to ensure quality trade setups. So, they lose money from the executions of their trades. Many novices in the Forex trading marketplace does not have a proper idea of short term trading. Only those who are keen to try out long term trading process in the demo account can work their way out with a rare experience. They also get a relaxing environment in the trading business.
Today we are going to discuss the defects of short term trading methods. The main goal is to take your head out of the idea of short trades. If you read this article carefully, the reason for avoiding short term trades will be clear to you.
You have to spend the whole day
When you are trading with scalping or day trading technique, you need to ensure a high quality trade setup. Throughout the day, you have to look for spots to place a trade. The entry and exits are important for the scaling of the trades. You can execute your trades properly even with a proper entry. But for that, you need to spend a significant amount of time on market analysis.
Unless you think right about the trading business, effective plans will not generate. On the other hand, you might have a low-quality market analysis skill. Therefore, you have a good chance to spend the whole day to study the markets. It is not suitable for the new traders in Singapore. The students who are mostly free in a day can maintain their business with short term trades. Unless you have an organized daily schedule, do not opt for a short term trading process like scalping or day trading. Think like pro traders in the options trading industry. They always trade with vision and they never rely on short term gains.
The investments might be big
As the short term trades provide less profit potential, the traders try to make plans to increase it. They think of big lot sizes and trading with them so that, it is possible to make big profits. You also need to remember the possibility of losing a trade. In Forex you will never lose trades frequently as a newbie. So increasing investment will only increase your potential to lose money. If you follow the path of big risk exposures, the end of your trading business is undeniable.
You need to think rationallyto manage the risk factors. Reduce the exposure to 1% and use leverage effectively. Think of a 1:20 leverage to the trades and you will be good with the investment. The lot size needs to be reasonable as well as controllable for the traders.
Frequent trades is not good at all
Along with big investments, some traders also think f frequent executions to ensure big profits. They cannot handle their trading business effeciently. Frequent trading approaches ruin their profit potential. Instead of giving a decent profit, you will lose quite some money from the trades. And when you are frequently executing the trades, the effect on the trading capital will be huge. It will not take too long to ruin your trading account. That is why you need to use a proper trading plan.
Use a proper risk management plan for the trades and define precise risk to reward ratio. For rookie trading, it will be good to trade for a 2R profit margin. When you have selected the target, look for the trade setup which can ensure your profit margin. Thus, you can ensure a secured yet effective trading business for making profits.
