Forex trading is getting very much popular in nowadays and most of the novice traders jump into the online trading world in order to make a quick money. But if you want to become a professional trader in the financial world it is highly imperative that you treat forex as a business. In the eyes of trained professional trading, the financial instrument is one of the toughest business in the world. There is a well-known proverb in the financial industry that the trend is your friend. So as a trader you should always trade the market in favor of the long-term prevailing trend. There is some dangerous consequence in trading against the trend and in this article, we will discuss this.
Poor quality trade execution: If you are trading the financial instrument for a long period of time then by now you must know that the market always moves in a trending fashion. During the trend, there are some minor pullbacks and these are called retracement in the market. If you don’t trade in favor of the long-term prevailing trend than by default you will be executing poor quality trades in the market since most of the time the market moves in favor of the trend.
Unnecessary risk: If you trade the financial market than its very obvious that you will have some losing trades in the market. Most of the novice traders fail to achieve success in the financial industry since they don’t know how to manage the losing orders in the market. In order to make consistent profit in trading, it is extremely important that you trade in favor of the long-term prevailing trend in the market since it will minimize the risk to a great extent.
Violation of basic rule: The first rule that every trader should follow in forex trading is to trade in favor of the long-term prevailing trend. By trading in favor of the long-term prevailing trend in the market you are actually increasing your winning percentage in the market but if you trade against the trend than it’s like catching a falling knife’s make sure that you execute your orders in the market in favor of the long-term prevailing trend to reduce the risk exposure in the market. If you always trade in favor of the long-term prevailing trend then you will see that the trading performance is enhanced to a great extent.
Summary: There are many different types of strategies to trade the financial instrument in the world. If you are relatively new in forex trading than its very obvious that you won’t be trading in favor of the trend. But in order to make a decent profit in trading, you should always execute your orders in the market in favor of the long-term prevailing trend since it will greatly reduce the risk exposure in the market. And always make sure to trade the higher time frame to avoid the unwanted spikes in the market.