How to lose everything – Worst forex strategy

You must be wondering, “Why would David Jenyns write about the worst Forex strategy?”

There are several reasons:

First, to warn you against the worst Forex strategy, since you do not want to eventually use the system.

Second, once you know what the Worst forex strategy is possible, maximizing your losses in the long run, you will be able to develop the opposite strategy that will work to your advantage.

Having experienced the worst forex trading strategy, you can create a system that will produce a positive effect in the long term. The worst forex trading strategy that I am referring to is the worst strategy, with which I have ever come across and is buying up shares with a decrease in their rate. This forex trading strategy is the process of buying shares that you previously purchased, with a decrease in their prices.

Traders often buy shares in such a way as to reduce the initial entry price.

Only non-professional investors use this strategy, buying stocks ruined enterprises to reduce the overall average price of the shares. This trading strategy is almost never effective, on the contrary, it is to use it – it’s like throwing money down the drain. It also increases the losses if shares continue to fall in price. Remember, if the shares are cheap right now, it does not mean that they do not become even cheaper.However, let’s check out exactly how this devastating Forex trading strategy. Suppose you bought a thousand shares for $ 40.

New investors can not have a fixed stop-loss, and the stock price drops to $ 30. Here also it appears the whole stupidity of this strategy forex trading – a novice trader can buy a thousand more shares at $ 30 to lower the average cost of shares, which he has already acquired. Thus, the average value of a share will be 35 dollars.

Unfortunately, the price of shares may fall even lower, and the novice trader can again buy even more shares to reduce the average cost of the shares. So he can buy more and more shares losing their money.

Now imagine that this Worst forex strategy is applied to the portfolio of assets. In the end, all the capital will automatically apply to the worst in the portfolio, and the best assets will be sold. The result is, at best, a failure to comply with the targets.

If a trader is using a strategy of buying shares at least reduce their prices, its losses will grow even more. The biggest problem with this strategy is that the profits will be reduced, and losses will continue to grow. My advice – never use such a strategy. The process of buying shares, observing a further decline in their prices and then throwing money to the wind in the hope that you will be able to reach the threshold of profitability or to make a breakthrough – one of the worst false tips on Wall Street. You should never be provided in a situation where you may be asking yourself, “Should I risk more than planned, in a desperate attempt to reduce losses and save your ass?”.

Develop instead a simple, robust system with good money management rules. I can guarantee you that the results will be better than buying shares as prices drop.

maroon

Deals with Financial market for 15 years, now in risk management and Asset Trading.

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