⏳ One question many new (and sometimes even experienced) traders ask is whether it is a good idea to wait out a bad trade and let it finally return to profit rather than just let it close by a stop-loss?
This question is totally normal and all traders probably wondered about this. However, the answer to it is almost always no. There are two problems with waiting out bad FX trades:
- It is likely that the exchange rate will never recover to level for your trade to become profitable. Not in a year, not even in 10 years. You could have bought USD/CHF at its high in October 2000, and you would still hold a massive loser of a trade 21 years later.
- You are missing potentially profitable opportunities to trade by keeping your margin locked — both to keep the trade active and to cover its floating loss. Besides, you would also be paying rollover fees every day to keep the position open.
By not using a stop-loss, you do not realize your floating losses, improving your overall on-balance profitability. While in many cases, it will work well — you will successfully wait out negative periods to close trades with some profit, eventually, it will lead to "eternal" losing positions, which will be a huge drag on your account growth.
Although, generally, it is a bad idea to wait out your losers, it is also necessary to mention that such technique can be a good choice in some specific cases:
- Non-leveraged stock or stock market index purchases. If you believe that the fundamentals are good for the stock's growth, there is no point in selling it. Such rationale rarely applies to Forex.
- Carry trades with large positive overnight swaps that can potentially outperform any exchange rate loss. In our age of near-zero interest rates, it doesn't look like a real possibility, but it is still a clear exception to the rule of 'no waiting out of bad trades.'
Overview of the major currency pairs' performance in September EUR/USD — was in a free fall during September. It was at the maximum at 1.1908 on September 3, at its minimum at 1.1562 on September 30, finishing the month at 1.1575.
GBP/USD — after a small growth, the pair entered a strong downtrend. The highest monthly rate was at 1.3912 on September 14, while the lowest — at 1.3411 on September 29. GBP/USD finished September trading at 1.3472.
USD/JPY — declined through the first two decades of the month before rising rapidly. The pair rose to as high as 112.07 on September 30, reaching a bottom at 109.11 on September 15 and closing the month with the 111.28 rate.
AUD/USD — rose initially but then declined in a very strong bearish wave. The monthly high was at 0.7477 on September 3, the monthly low — at 0.7169 on September 29. Trading ended at 0.7225 for this currency pair.
USD/CAD — was moving sporadically up and down during September. The maximum level for this pair was 1.2895 on September 20, while the minimum — 1.2492 on September 3. The month's trading ended at 1.2680 for USD/CAD.
Interest rate changes in September Brazil 5.25% +1.00% 6.25% Hungary 1.50% +0.15% 1.65% Norway0.00% +0.25% 0.25% Russian Federation 6.50% +0.25% 6.75% Turkey 20.50% -1.00% 19.50% You can see the current interest rates by the world's central banks in our interest rates table.
MetaTrader indicators No new MetaTrader indicators have been added to EarnForex.com since the last issue of the newsletter, but we have updated one indicator during the period:
- Position Size Calculator has been updated (along with its trading script PSC-Trader) to fix some bugs and add new usability improvements.
You can always view the previously uploaded Forex indicators.
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