Pokrewne
- Strona Główna
- Christian Apocrypha and Early Christian Literature. Transl. By James
- James Shore, Shane Warden agile development. filozofia programowania zwinnego pełna wersja
- James L. Larson Reforming the North; The Kingdoms and Churches of Scandinavia, 1520 1545 (2010)
- Wallance James Bill Gates i jego imperium Micr
- (eBook) James, William The Principles of Psychology Vol. I
- Amanda Garret 4 Podwójny cel Cobb James
- Tiptree James Jr Jasnosc splywa z powietrza
- Swiadkowie Bozego Milosierdzia
- Jan Od KrzyA1 4a, A w DzieA,a
- Lem Stanislaw Cyberiada (SCAN dal 851)
- zanotowane.pl
- doc.pisz.pl
- pdf.pisz.pl
- aniadka.keep
[ Pobierz całość w formacie PDF ]
.As notedearlier in this chapter within the section on being properly capi-talized, there are some rough guidelines that many prudent tradersfollow when planning their trade size and account capitalization.For example, a trader planning on trading standard lots of $100,000,where the margin required per trade is $1000 (at 100:1 leverage),would probably want to have $10,000 in trading account equity, atthe very least.At the same time, however, this does not necessarilymean that a trader with $10,000 in a trading account has to trade instandard lots.Mini-lots are perfectly fi ne, even for larger accounts,and they actually have an advantage over standard lots.Mini-lots203 El ement s of Successf ul For ei gn Exchange Tr adi ngare much more fl exible than standard lots in providing the abilityto trade in odd unit sizes (e.g., 70,000 currency units traded with 7mini-lots, as opposed to a 100,000 unit minimum for standard lots).In addition, mini-lots can accommodate multiple fractional positions(as explained later in this section).Clearly, one of the most significant results of trading larger lotsizes is the increased dollar value per pip.Among other effects ofhigher pip value is that it can obviously impact trading psychology agreat deal.Any trader knows the difference between having a smallamount on the line and having a great deal on the line.A traderwatching $1/pip price movements is generally less apt to sweat andmake rash trading decisions than the one watching $10/pip pricemovements.Overtrading with regard to position-sizing often forces thetrader either to abandon proper money management principles orset stop losses that are unrealistically close.This is due to the factthat in order to retain the same risk profile, higher pip values neces-sarily mean a smaller number of pips to cushion the trade.The pri-mary point about proper position-sizing is to avoid overextendingaccount capital and getting into fi nancially uncomfortable tradingsituations.Closely related to overall position-sizing in the realm of riskmanagement is the concept of multiple fractional positions.This isyet another method to help spread and control risk.Multiple frac-tional positions are smaller components of the main trade.Thesesmaller positions may be entered all at the same time, and then eachfractional position can progressively be closed in a staggered manner204 Posi t i on Over l oadto lock in profi ts as the position moves in a profi table direction.So,for example, if a trader enters into a long position using 10 mini-lots(instead of 1 standard lot), each mini-lot can be closed for a profit asthe price increases, thereby securing partial profi ts in a progressivefashion.Another method of spreading risk using multiple fractionalpositions employs staggered entries, as opposed to staggered exits.Each fractional position would be entered at a different price level.Because it is extremely diffi cult to pinpoint precisely the best singleentry on a trade, multiple fractional entries allow traders to get in ona position within a fl exible price range instead of at just one price,thereby spreading some risk among different price levels.Position OverloadAlso closely related to overall position-sizing is the common afflic-tion of overtrading by opening too many full-sized positions (asopposed to fractional) at the same time.In foreign exchange trading,the danger in overtrading lies in more than just the overextension ofaccount margin, although that is also of grave concern.The danger that is often overlooked in this market stems fromthe fact that, relatively speaking, there are so few different instru-ments that are practically tradable.This means that it is extremelydiffi cult, if not virtually impossible, to diversify holdings adequately.In addition, the primary trading instruments in foreign exchangetrading are correlated very closely with one another.This can beeither a positive correlation or a negative correlation.205 El ement s of Successf ul For ei gn Exchange Tr adi ngIn the world of equities trading, finding diverse, noncorrelatedinvestments can be relatively straightforward.In forex, on the other hand,the four most actively traded currency pairs, EUR/USD, USD/JPY,GBP/USD, and USD/CHF, are all dependent on the relative value ofthe U.S.dollar.The same is true for the next most actively traded pairs,AUD/USD and USD/CAD.Beyond this, there are only a handful ofcommon cross currency pairs that are not dollar-based, like EUR/GBP,EUR/JPY, GBP/JPY, and so on, but these are also extremely interre-lated.Rounding out the list, most of the exotic pairs are not even prac-tically tradable because of their intolerably wide spreads stemming fromtheir low liquidity.So if a trader/investor is involved solely in the forexmarket, diversification is simply not a viable option.Therefore, overtrading in forex can be doubly dangerous.Notonly does it create risk in overextending margin, but it also increasesexposure to highly correlated instruments.There are several ways to help mitigate this type of risk.Themost obvious way is to place a strict maximum on the number ofpositions entered at one time.This means that the trader must sim-ply have the discipline to refrain from overtrading.Another way isto reduce the size of each individual trade, as in multiple fractionalpositions [ Pobierz całość w formacie PDF ]
zanotowane.pl doc.pisz.pl pdf.pisz.pl agnieszka90.opx.pl
.As notedearlier in this chapter within the section on being properly capi-talized, there are some rough guidelines that many prudent tradersfollow when planning their trade size and account capitalization.For example, a trader planning on trading standard lots of $100,000,where the margin required per trade is $1000 (at 100:1 leverage),would probably want to have $10,000 in trading account equity, atthe very least.At the same time, however, this does not necessarilymean that a trader with $10,000 in a trading account has to trade instandard lots.Mini-lots are perfectly fi ne, even for larger accounts,and they actually have an advantage over standard lots.Mini-lots203 El ement s of Successf ul For ei gn Exchange Tr adi ngare much more fl exible than standard lots in providing the abilityto trade in odd unit sizes (e.g., 70,000 currency units traded with 7mini-lots, as opposed to a 100,000 unit minimum for standard lots).In addition, mini-lots can accommodate multiple fractional positions(as explained later in this section).Clearly, one of the most significant results of trading larger lotsizes is the increased dollar value per pip.Among other effects ofhigher pip value is that it can obviously impact trading psychology agreat deal.Any trader knows the difference between having a smallamount on the line and having a great deal on the line.A traderwatching $1/pip price movements is generally less apt to sweat andmake rash trading decisions than the one watching $10/pip pricemovements.Overtrading with regard to position-sizing often forces thetrader either to abandon proper money management principles orset stop losses that are unrealistically close.This is due to the factthat in order to retain the same risk profile, higher pip values neces-sarily mean a smaller number of pips to cushion the trade.The pri-mary point about proper position-sizing is to avoid overextendingaccount capital and getting into fi nancially uncomfortable tradingsituations.Closely related to overall position-sizing in the realm of riskmanagement is the concept of multiple fractional positions.This isyet another method to help spread and control risk.Multiple frac-tional positions are smaller components of the main trade.Thesesmaller positions may be entered all at the same time, and then eachfractional position can progressively be closed in a staggered manner204 Posi t i on Over l oadto lock in profi ts as the position moves in a profi table direction.So,for example, if a trader enters into a long position using 10 mini-lots(instead of 1 standard lot), each mini-lot can be closed for a profit asthe price increases, thereby securing partial profi ts in a progressivefashion.Another method of spreading risk using multiple fractionalpositions employs staggered entries, as opposed to staggered exits.Each fractional position would be entered at a different price level.Because it is extremely diffi cult to pinpoint precisely the best singleentry on a trade, multiple fractional entries allow traders to get in ona position within a fl exible price range instead of at just one price,thereby spreading some risk among different price levels.Position OverloadAlso closely related to overall position-sizing is the common afflic-tion of overtrading by opening too many full-sized positions (asopposed to fractional) at the same time.In foreign exchange trading,the danger in overtrading lies in more than just the overextension ofaccount margin, although that is also of grave concern.The danger that is often overlooked in this market stems fromthe fact that, relatively speaking, there are so few different instru-ments that are practically tradable.This means that it is extremelydiffi cult, if not virtually impossible, to diversify holdings adequately.In addition, the primary trading instruments in foreign exchangetrading are correlated very closely with one another.This can beeither a positive correlation or a negative correlation.205 El ement s of Successf ul For ei gn Exchange Tr adi ngIn the world of equities trading, finding diverse, noncorrelatedinvestments can be relatively straightforward.In forex, on the other hand,the four most actively traded currency pairs, EUR/USD, USD/JPY,GBP/USD, and USD/CHF, are all dependent on the relative value ofthe U.S.dollar.The same is true for the next most actively traded pairs,AUD/USD and USD/CAD.Beyond this, there are only a handful ofcommon cross currency pairs that are not dollar-based, like EUR/GBP,EUR/JPY, GBP/JPY, and so on, but these are also extremely interre-lated.Rounding out the list, most of the exotic pairs are not even prac-tically tradable because of their intolerably wide spreads stemming fromtheir low liquidity.So if a trader/investor is involved solely in the forexmarket, diversification is simply not a viable option.Therefore, overtrading in forex can be doubly dangerous.Notonly does it create risk in overextending margin, but it also increasesexposure to highly correlated instruments.There are several ways to help mitigate this type of risk.Themost obvious way is to place a strict maximum on the number ofpositions entered at one time.This means that the trader must sim-ply have the discipline to refrain from overtrading.Another way isto reduce the size of each individual trade, as in multiple fractionalpositions [ Pobierz całość w formacie PDF ]