Trading Currency Improving Your Situation
I had decided to write an article about punters in forex trading. I looked up various definitions of 'punter' on the internet in relation to this. Simply searching for 'punt' resulting in more definitions than I needed, so I focussed on the word 'punter'. This lead to the definition I was after. The definition came from Britain, and describes a punter as a person who uses a bookmaker to place bets and gamble.
Through my searches, I did not find a formal definition for the word 'punter' in forex trading. In line with the general definition for 'punter' that I had found, a punter in forex trading is someone who treats trading more like gambling - they trade using instinct and often appear to go against the market.
My desire to write an article about punting is partly down to the fact that after decades of forex trading, I occasionally have the urge to take a punt, to gamble on a trade. It is only discipline that prevents me from going ahead. In my early days, I was a bank trader. This was before the days of screens providing all the market details, and we had to rely on instinct in order to trade. Perhaps it is this background which leads to my desire to punt nowadays. On the contrary, it may be the wealth of market information that we now have available. You can focus on the price action on the screens and get drawn into trading that way. Either way, punting is not a method for long term success, no matter how good your market instincts are.
Gut instinct trades are not well thought through in terms of risk and reward. When you are on the right side of trading, the profits come too soon, but on the wrong side the losses come too late. Instinctive trades are based on the hope that you have timed it right to find wither the top or bottom of the market.
The price action of the USD/CAD rate today (Oct 20, 2009) was one of the reasons that I decided to write an article about punting. The decision by the Bank of Canada to hold rates was not a surprise, but caused the USD/CAD to firm. The rate fell sharply in line with an overall weak US dollar the previous day, closing at 1.0298. Before the Bank of Canada's decision, trading was around 1.0310. Market punters looked to sell at every pause. I abandoned the idea after looking at the charts, despite my instinct telling me to sell. After pausing at various levels, many punters were drawn in, but it continued to rise higher, peaking at a final price of 1.0525. Some punters may have made a few pips by fading moves and quickly buying back USD/CAD, but generally losses far outstripped gains if entry into the market was not timed right. The risk/reward ratio was very poor.
Neither punting, nor any other form of forex trading, are a guaranteed method for long term success. It has been said before, and it is worth reiterating, traders who treat currency trading as though they are gambling in a casino, will get the same results in the long term as though they were gambling in a casino. If forex trading is treated as a business, with strong analyses, risk/reward ratio strategies and good money management, there is a far greater chance of success. - 23204
Through my searches, I did not find a formal definition for the word 'punter' in forex trading. In line with the general definition for 'punter' that I had found, a punter in forex trading is someone who treats trading more like gambling - they trade using instinct and often appear to go against the market.
My desire to write an article about punting is partly down to the fact that after decades of forex trading, I occasionally have the urge to take a punt, to gamble on a trade. It is only discipline that prevents me from going ahead. In my early days, I was a bank trader. This was before the days of screens providing all the market details, and we had to rely on instinct in order to trade. Perhaps it is this background which leads to my desire to punt nowadays. On the contrary, it may be the wealth of market information that we now have available. You can focus on the price action on the screens and get drawn into trading that way. Either way, punting is not a method for long term success, no matter how good your market instincts are.
Gut instinct trades are not well thought through in terms of risk and reward. When you are on the right side of trading, the profits come too soon, but on the wrong side the losses come too late. Instinctive trades are based on the hope that you have timed it right to find wither the top or bottom of the market.
The price action of the USD/CAD rate today (Oct 20, 2009) was one of the reasons that I decided to write an article about punting. The decision by the Bank of Canada to hold rates was not a surprise, but caused the USD/CAD to firm. The rate fell sharply in line with an overall weak US dollar the previous day, closing at 1.0298. Before the Bank of Canada's decision, trading was around 1.0310. Market punters looked to sell at every pause. I abandoned the idea after looking at the charts, despite my instinct telling me to sell. After pausing at various levels, many punters were drawn in, but it continued to rise higher, peaking at a final price of 1.0525. Some punters may have made a few pips by fading moves and quickly buying back USD/CAD, but generally losses far outstripped gains if entry into the market was not timed right. The risk/reward ratio was very poor.
Neither punting, nor any other form of forex trading, are a guaranteed method for long term success. It has been said before, and it is worth reiterating, traders who treat currency trading as though they are gambling in a casino, will get the same results in the long term as though they were gambling in a casino. If forex trading is treated as a business, with strong analyses, risk/reward ratio strategies and good money management, there is a far greater chance of success. - 23204
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posted by X - Men @ 9:44 AM
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