Learn How To Lose Everything – The Worst Forex Trading Strategy Ever That You Could Be Using!
Why should you know about the worst Forex trading approach known to man, you might question.’
There are several causes for this:
First and foremost, I’d like to warn you about the worst Forex trading technique possible, because you definitely don’t want to wind up employing it.
Second, after you understand the worst conceivable Forex trading strategy, i.e., the approach that is meant to maximize your losses over the long term, you can reverse it and create a strategy that does the polar opposite of what you learned from the previous strategy.
By incorporating the lessons learned from the worst Forex trading method, you will be able to design a trading system that will provide substantial long-term profits for you. “Averaging down” is the term used to describe the worst Forex trading technique I have ever encountered, and it is simply the worst Forex trading approach I have ever come across. This dreadful Forex trading method consists on the practice of purchasing additional shares of stock that you have already purchased as the price of the stock lowers.
Stock traders frequently purchase shares in this manner in order to lower the price at which they enter the market.
It is only terrible investors who average down their portfolios by purchasing shares of sinking assets in order to lower their total average price per share. This Forex trading method is almost never successful, and it is frequently compared to throwing good money after bad. It also increases the magnitude of a trader’s loss if the stock continues to decline. Remember that just because a stock is inexpensive now does not imply that it will not become even more so in the future. However, let us take a closer look at how this destructive Forex trading method operates. Consider the following scenario: you purchased 1,000 shares at $40 each.
The newbie investor may not have a stop loss in place, resulting in the stock price falling to $30 dollars in the end. Herein is the folly of this Forex trading method, which is designed to average down the newbie trader’s position by another thousand shares at $30 in order to reduce the average cost per share that he had already purchased. As a result, his average cost per share has increased to $35.
In the worst case scenario, the stock price drops even lower, prompting the rookie trader to acquire even more shares in order to reduce the average cost per share. They end up investing an increasing amount of money into a stock that is losing money.
Think about how this Forex trading technique would be used over a diverse range of assets. In the end, all of the capital will be automatically allocated to the portfolio’s worst-performing assets, with the best-performing assets being sold off to make room for new capital. The result is, at the very least, a catastrophic underperformance relative to the market.
If a trader employs an averaging down strategy in conjunction with margins, his or her losses will be compounded even higher.
The most serious flaw in this Forex trading technique is that it causes a trader’s profits to be cut short, while the losses are allowed to continue. My recommendation is to never average down. It’s one of the most erroneous pieces of advice you can get on Wall Street: buying a stock, seeing it decline, then throwing more money at it in the goal of either breaking even or making a bigger profit. Be careful not to find yourself in a situation where you have to ask yourself, ‘Should I risk even more than I initially meant in a desperate attempt to reduce the cost and save my buttocks?’
Instead, create a straightforward, dependable system with sound money management principles. I can almost guarantee that the results will be superior to those obtained by averaging down.