3. Too large the level of leverage
Leverage is a two-way street or two-edged sword as you prefer. Brokers prefer the use of high leverage, because it means more
money for them to spread. The more open position (for more money – thanks to high leverage), the more profit from the spread goes
to the broker. A high the level of leverage, this means a high risk of loss of funds, for example, when the trend reversed (more on
reducing the risks when investing you will learn from the article: Investments based on the mini flights recipe for success).
2. Too much investment intensity
Too much and too frequent opening and closing positions (buying and selling), just to earn a few dollars, you really making fun
pocket broker, not the investor. Attitude to earn quick money by closing the position, even when only offer the lowest profit, a
strategy that has no chance of success in the long run. Unless you are planning to devote all his time on the forex and want to deal
with professionally daytrading(more about day trading learn from the article: Day trading – short-term investment strategy).
1. The lack of sufficient knowledge
Most new investors in the forex commits the same error – does not devote enough time to learn. The main issue when investing in
the forex is to learn what influence a change in exchange rates. New investors do not pay attention to it when publish dare most
important for traffic reports, currency prices, and therefore they lose a unique opportunity. It was shortly after the announcement of
the report comes to the biggest price hikes rates. Most new investors are not aware of it and invest at inopportune moments, making
it difficult to generate profits (More on this when there are important economic data to learn from the article: The investments based
one economic data).
How achieve success in the forex?
In this article you will find some of the important reasons for both new and experienced investors lose money when you invest in the
forex. Instead of feeling from your mistakes, learn how to avoid them.
Why trade with a mini flight?
The greatest benefit of the investment based on a mini-flying is the balance between the size of the investment (in terms of profit
opportunities) and the level of risk of loss of investment which gives us the kind of buy / sell rates. For example, decide to enter
a long position with a pair of USD / JPY. Suppose you make a purchase at a price of 103.55 and set a stop-loss order at 15 pips
below the purchase price, at 103.40. If a broker on your account have $ 1000 to keep in mind that the maximum level of risk which
you take in each investment (purchase) is 3% of its funds in your account.
Because the account you have $ 1000, this 3% is $ 30 If the investment fails to work and stop-loss, and handlowałeś using mini lots,
you will lose only $ 15 If you’re ready to take the risk of losing $ 30, you can make investments with two mini-flights and try to use
the lever. If you want to investing based on a standard flight, such an operation would be impossible because the possible loss by
closing the position when the price drops by 15 pips, as in the example above, would mean the loss of $ 150, which represents 15%
of our capital account. This level of risk is unacceptable.Allows a maximum of 3% to reduce the risk of losing capital, allows you to
open multiple items, but it is possible using only a mini flight.
Mini flights allow the investor to maximize the effective use of leverage in each investment. When using the mini-flying investment
you can make about the same height as a standard fly simply by opening a mini 10 items. If you want to invest half of a standard
flight, you just open the 5 items using a mini.
Pip and a value of it
Before we get into detailed discussion of trading using the mini-flight, it is necessary to illustrate the value of a pip. Suppose we
trade a pair GBP / JPY. British pound is the base currency and the Japanese yen is the currency quoted. If this currency is a
departure from the rule for determining the value of a pip in the fourth decimal place.For this pair of currencies, the yen as the
second hand in hand, the pitch of one pip is measured in the second decimal place. Jen is the only such exception. When we buy
U.S. dollars arranged in tandem with the yen and the dollar against the yen price increased from 103.45 to 103.46, an increase of
the value pairs 1 pip. Multiplying the value of the jump by the amount of currency standard (standard lot) -0.01 x 100, 000,we obtain
a value of 000 yen. To see our profits in dollars, which is usually carried our account with the broker must divide the amount earned
on such an operation yen – 1000 by the price of the dollar, which amounted to 103.46, giving us a profit of $ 9.66(1000/103, 46 = $
9.66).
The base currency, and the second currency of a pair
Another very important portion of the information that must be remembered that the construction of a currency pair. Each pair of
currencies made up of so-called. base currency, this is the first currency in the pair, and the so-called “quote currency” currency held
second place in hand. In the case of currency pair EUR / USD, the euro is the base currency, the dollar is the currency quoted. Our
profit or loss is always expressed in relation to the quote currency.
What is the pip?
Before we can fully understand the benefits of trading a mini flight, it is necessary to familiarize yourself with the concept of a pip.
Pip is the smallest value of that currency pair may change its value. For most currency pairs pip jump with a mean change of the
value pairs defined in the fourth decimal place.
For example: If the price of EUR / USD is 1.5567, and changes its value at 1.5568, this means that increased by 1 pip. A value of 1
pip is multiplied by the size of the flight, which we trade. So if you buy a standard lot, 100 000 EUR / USD at 1.5567price and value
pairs rises to 1.5568, so the increase is about 1 pip, the value of your steam rose about $ 10 – this also earn a profit (whence $ 10 ?
- 100 000 x0.0001).
If buy using a mini flight, then doing the exact same calculation, thus multiplying the value of a mini lot – 10 000 (instead of 100 000
of a standard lot) by 1 pip, get $ 1 (10 000 x 0.0001 = $ 1). If you invest using a standard lot, the value of the jump of 1 pip is $ 10,
and a mini lot with just $ 1 Of course, this situation takes place in pairs, in which the U.S. dollar is in second place.
Investments with a mini flight recipe for success
Trading currencies means buying the currency of one country’s currency and the simultaneous sale of another state. This means
that each operation Purchase / sale takes place on two currencies. The most common unit of trade in currency pairs is 100, 000,
called the “standard of flight.”
In most cases, novice investors are not willing to take risks posed by the start of trading by using a standard lot. As a result, most
online brokers in the forex market offers the opportunity to invest using a mini lot, which is 10 000 units of currency pairs. For novice
investors benefit from a mini flight can be a great learning tool for investing in the forex.
What’s the leverage?
The lever opens the door to big profits, but always involves risk. Sam is a tempting lever mechanism. By using the leverage we are
able to open a lot more items than would be possible only by using the money to our account. Since the maximum allowable level of
risk of losing their own funds in each investment is 3% of the funds held in your account (For more on how to invest in maintaining
the principle of not risking more than 3% of you will learn from the article: Investing with a mini flight recipe for success), the lever is
really a good solution, only provided that this risk level of 3%. Unfortunately, many investors are allocating a small amount of money
to start, using levers and often recklessly risking too much resources.
The investor, who credited my account the amount of $ 1000 broker can use to invest an amount up to $ 100 000 (thanks to the
lever 100 to 1). This allows you to significantly increase profits, but may also result in greater losses. The use of such leverage
is desirable as long as it maintained the principle of not risking more than 3% of your capital account. This means that with this
account, the amount of funds by purchasing currency, we should not risk more than $ 30 For floating the currency market, it will give
us control over our funds and for prompt response stop-loss will not cause too much loss.
Each investor must learn patience. You can not be tempted to quickly commute $ 1000 to $ 2000. It is possible, but definitely better
manage risk sensibly and slowly build your profits, than in case of a sudden reversal of the trend, losing everything in a few hours.
Most investors start forex adventure with having too few funds. The amount of $ 1000 dollars is the best starting level, because it
allows the effective use of leverage, and above all, allows you to minimize the risk by keeping the principle of 3%. If you start the
adventure with a smaller amount of forex, you must be very well prepared in terms of content and you have to prepare for possible
losses. With an amount less than $ 1000 U.S. dollars an investor must also be very patient. Open positions should be based on
multiple studies and skillful reading of indicators. Also remember to first check out free forex practice account.