You may have heard the term, less is more. One of the most significant issues I had to deal with was how not to overtrade. As a newbie in forex trading, I thought that the more trades I took, the greater my profits would be. Well, experience has taught me otherwise. Trying to trade a lot of currencies usually results in making money and giving it back to the market or even having losing streaks.
In stock trading, the financial instruments traded are company shares. In the forex market, the financial instrument traded is the currency or economy of various nations. From my experience, focusing on one economy has made a big difference in my trading outcomes and helped me focus on fewer pairs. It’s more like becoming a specialist instead of being a general practitioner in the field of medicine. Specialists earn more than general practitioners in most cases. So focusing on one economy and 2 to 3 crosses within that economy is likely to pay you more as a forex trader.
But how do you decide on which currency to trade? Ironically, it’s by trading everything at first over some time and studying the behavior of these pairs and their unique price action with regards to your trading strategy. Then documenting the outcomes and comparing them. This is a lot of hard work and should be done in a demo account. I did this for about a full year and decided that the Japanese Yen would produce the best outcome. I trade only GBPJPY, EURJPY, and CADJPY. This has greatly reduced the stress that comes with deciding what to trade when you have many options and has completely eradicated overtrading and also the occurrence of losing streaks. I do have losses once in a while but these are very controlled and minimal. I have also been a lot happier with my trading experience and outcomes since I became a Yen specialist.
Below are 5 advantages of trading less or trading fewer pairs:
- It reduces emotional stress and confusion.
- Giving profit made back to the market will occur less often.
- It Eliminates Overtrading.
- Prevents FOMO-Fear of Missing out.
- Reduces the probability of losing streaks occurring.
If you are thinking that you could be leaving so much money on the table by streamlining to a few pairs, you may be wrong. Trading less could keep more money in your wallet because less is more.
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