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Conservative Forex Trading
Despite the fact that there are many strategies for online foreign exchange trading, many choose to gain profits only through conservative Forex trading. Forex traders succeed if they make more money than they lose in trading the markets. In conservative Forex trading one seeks to lose substantially less than one gains and as much as possible never to lose a trade. How is this possible? Is it possible to never have a bad trade? If one buys options on foreign currencies there is the price of the options contract but one never executes the contract unless it is profitable. If a trader limits himself to far distant and out of the money contracts his costs in trading Forex are minimal. There is never a truly bad trade and there will be an occasional exceptional trade. In addition to smart options trading of currency pairs, there are examples of strategic Forex trading in which a trader only picks the best trades and never “goes fishing” for a questionable trade. These are examples of conservative Forex trading.
Options May Be the Best Option for Conservative Forex Trading
As we mentioned above, buying out of the money options can be a reasonable means of keeping trading costs down, never having a losing trade, and making money on options trades. As in all market trading, a trader needs to be familiar with the fundamentals that drive currency prices, choose the most profitable Forex pair based on analysis, and watch market sentiment using any of several technical trading tools. Simply picking out of the money currency positions and buying puts and calls can be a way of limiting losses but still losing all of one’s trading capital over time. The point is to pick winners, limit your involvement in the market to promising situations, and conserve capital while waiting for winners. This approach can work when buying calls or puts. A call gives the trader the right to buy one currency with the other at a set price no matter how high that price might go up. A put gives the trader the right to sell a currency at a set price no matter how low it might go down. In neither case is the trader obligated to execute a contract and will only do so what it is profitable. This can be profitable as well as conservative Forex trading.
Picking Only the Best Trades Is Conservative Forex Trading
Currency trading can be addictive as all too many traders find out to their dismay. Currency trading is fast paced when working at a trade station. There is immediate reward when executing a profitable trade. Rewards of profitable trades can arrive randomly. This can set up an intermittent reinforcement pattern that sucks a trader into making increasingly bad trades in a losing session...
2. DESPITE THE FACT THAT THERE ARE
MANY STRATEGIES FOR ONLINE
FOREIGN EXCHANGE TRADING, MANY
CHOOSE TO GAIN PROFITS ONLY
THROUGH CONSERVATIVE FOREX
TRADING.
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3. FOREX TRADERS SUCCEED IF THEY
MAKE MORE MONEY THAN THEY LOSE
IN TRADING THE MARKETS.
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4. IN CONSERVATIVE FOREX TRADING
ONE SEEKS TO LOSE SUBSTANTIALLY
LESS THAN ONE GAINS AND AS MUCH
AS POSSIBLE NEVER TO LOSE A
TRADE.
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5. HOW IS THIS POSSIBLE?
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6. IS IT POSSIBLE TO NEVER HAVE A BAD
TRADE?
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7. IF ONE BUYS OPTIONS ON FOREIGN
CURRENCIES THERE IS THE PRICE OF
THE OPTIONS CONTRACT BUT ONE
NEVER EXECUTES THE CONTRACT
UNLESS IT IS PROFITABLE.
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8. IF A TRADER LIMITS HIMSELF TO FAR
DISTANT AND OUT OF THE MONEY
CONTRACTS HIS COSTS IN TRADING
FOREX ARE MINIMAL.
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9. THERE IS NEVER A TRULY BAD TRADE
AND THERE WILL BE AN OCCASIONAL
EXCEPTIONAL TRADE.
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10. IN ADDITION TO SMART OPTIONS
TRADING OF CURRENCY PAIRS,
THERE ARE EXAMPLES OF STRATEGIC
FOREX TRADING IN WHICH A TRADER
ONLY PICKS THE BEST TRADES AND
NEVER “GOES FISHING” FOR A
QUESTIONABLE TRADE.
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11. THESE ARE EXAMPLES OF
CONSERVATIVE FOREX TRADING.
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12. OPTIONS MAY BE THE BEST
OPTION FOR CONSERVATIVE
FOREX TRADING
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13. AS WE MENTIONED ABOVE, BUYING
OUT OF THE MONEY OPTIONS CAN BE
A REASONABLE MEANS OF KEEPING
TRADING COSTS DOWN, NEVER
HAVING A LOSING TRADE, AND
MAKING MONEY ON OPTIONS TRADES.
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14. AS IN ALL MARKET TRADING, A
TRADER NEEDS TO BE FAMILIAR WITH
THE FUNDAMENTALS THAT DRIVE
CURRENCY PRICES,
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15. CHOOSE THE MOST PROFITABLE
FOREX PAIR BASED ON ANALYSIS, AND
WATCH MARKET SENTIMENT USING
ANY OF SEVERAL TECHNICAL
TRADING TOOLS.
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16. SIMPLY PICKING OUT OF THE MONEY
CURRENCY POSITIONS AND BUYING
PUTS AND CALLS CAN BE A WAY OF
LIMITING LOSSES BUT STILL LOSING
ALL OF ONE’S TRADING CAPITAL OVER
TIME.
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17. THE POINT IS TO PICK WINNERS, LIMIT
YOUR INVOLVEMENT IN THE MARKET
TO PROMISING SITUATIONS, AND
CONSERVE CAPITAL WHILE WAITING
FOR WINNERS.
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18. THIS APPROACH CAN WORK WHEN
BUYING CALLS OR PUTS.
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19. A CALL GIVES THE TRADER THE RIGHT
TO BUY ONE CURRENCY WITH THE
OTHER AT A SET PRICE NO MATTER
HOW HIGH THAT PRICE MIGHT GO UP.
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20. A PUT GIVES THE TRADER THE RIGHT
TO SELL A CURRENCY AT A SET PRICE
NO MATTER HOW LOW IT MIGHT GO
DOWN. IN NEITHER CASE IS THE
TRADER OBLIGATED TO EXECUTE A
CONTRACT AND WILL ONLY DO SO
WHAT IT IS PROFITABLE.
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21. THIS CAN BE PROFITABLE AS WELL AS
CONSERVATIVE FOREX TRADING.
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22. PICKING ONLY THE BEST
TRADES IS CONSERVATIVE
FOREX TRADING
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23. CURRENCY TRADING CAN BE
ADDICTIVE AS ALL TOO MANY
TRADERS FIND OUT TO THEIR DISMAY.
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24. CURRENCY TRADING IS FAST PACED
WHEN WORKING AT A TRADE STATION.
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25. THERE IS IMMEDIATE REWARD WHEN
EXECUTING A PROFITABLE TRADE.
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27. THIS CAN SET UP AN INTERMITTENT
REINFORCEMENT PATTERN THAT
SUCKS A TRADER INTO MAKING
INCREASINGLY BAD TRADES IN A
LOSING SESSION.
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