FUTURE TRADING STRATEGIES TO AVOID

While there’s no doubt that having an effective trading strategy can significantly improve your trading performance, there are also certain points and strategies that you should avoid. Here’re the most important ones:While there’s no doubt that having an effective trading strategy can significantly improve your trading performance, there are also certain points and strategies that you should avoid. Here’re the most important ones:

• Trading highly illiquid markets – The liquidity of the market depends on the number of buyers and sellers at each price level. A highly-liquid financial instrument, such as the EUR/USD pair or stocks of blue-chip companies like Apple, have a large number of market participants ready to jump into the market at almost any price-level around the current market price. This reduces the volatility of the security or currency pair, but also the associated trading risks. Illiquid financial instruments can fluctuate a lot even on small trading orders, which can quickly lead to large losses.
• Scalping strategies – Scalping is a popular short-term trading style that tries to take advantage of very small price movements on very short-term timeframes. Scalping is fast-paced and exciting and attracts many traders, especially those who are just getting started with trading. Unfortunately, those traders often end up with heavy losses. To be consistently profitable with scalping, you’ll need experience, discipline, and nerves of steel. First learn how to trade profitably with longer-term trading styles, such as swing trading and day trading, before getting your feet wet with scalping.
• Holding trades over the weekend – Each time you decide you hold a trade overnight or over the weekend, you can be exposed to unfavorable market events that can lead to losses. This is especially true when holding trades over the weekend.
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