Shulou(Shulou.com)06/02 Report--

Retail customer participation in the foreign exchange market is significantly low, which also determines that the current domestic information support and education for foreign exchange market participants are obviously lagging behind, but also makes many novices go through a lot of detours. The author summarizes the following taboos on foreign exchange trading to share with readers:

1. long-term investment.

First of all, it is necessary to make clear that there is an essential difference between the foreign exchange market and other markets. The foreign exchange market is a relative market, and its essence is a place of zero-sum games, which determines that it is definitely not worth long-term investment.

The data is the best proof that no matter what kind of currency conversion you made at the starting point in the past five years or 10 years or more, there are only two possible outcomes over a long period of time: the first is that the currency you bought has depreciated, and the loss really outweighs the gain.

The second relatively good result is that even if the currency you buy appreciates, what is the rate of return over time? Among the mainstream currencies, we chose the Canadian dollar, which has performed best in the past five years and 10 years, as an example. Its cumulative absolute increase against the US dollar is only 10% and 23%, and the annual compound yield will hover around 2%. You know, this is already the best of all options.

Therefore, before entering the foreign exchange market, you must clearly realize that this market is not a Buffett-style market for the rest of your life. This market requires diligent band trading to achieve the profit goal, although it does not completely exclude relatively long-term strategic choices (no more than one year). In other words, the foreign exchange market is a real "trading" market.

two。 Diversify your investment.

For the same reason as above, Markowitz's portfolio theory is basically not applicable in the foreign exchange market. If the truth of "don't put eggs in one basket" has a theoretical background in other markets, especially capital markets, it will become a fallacy in the foreign exchange market.

Because different trading targets in the capital market will form a weak correlation because of industry differences, individual differences and other factors, the foreign exchange market is characterized by an obvious anchor (such as the US dollar since World War II). Almost all currencies will form consistent direction fluctuations with this anchor, which makes orders in the foreign exchange market more based on the judgment of the direction of the anchor. Once there is a prediction of the trend of the anchor

On the contrary, the variety selection in the second step has become a relatively minor task. Of course, in this second step of work, the author has always adhered to the only preferred principle, if the excessive diversification strategy is adopted at this time, it will involve unnecessary energy and affect the decision-making judgment of the first step.

At the extreme, if you have half of your foreign currency pool of dollars and the other half allocates non-American currencies in proportion to the dollar index, unfortunately, your portfolio has ensured that you are in an invincible position.

3. Superstitious experts.

When many new entrants to the market watch the exchange reviews through different channels, they will form a preference for individual experts. Of course, there are many foreign exchange analysts who have good market judgment, but this does not mean that it can bring much real help to your actual trading. Apart from the fact that most foreign exchange reviews lack the timeliness that foreign exchange exchanges particularly value, what is more important is that most trading strategies will not remain static forever. If you only listen to a recommendation from an expert, but ignore the corresponding dynamic profits, stops, and sudden strategic changes, you will probably suffer from your follow-up behavior. Therefore, instead of "fish" with experts, it is not as good as "fishing" with experts, so that in the long-term trading process, you can become a winner rather than a loser.

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