The Benefits of Sticking to a Single Market While Trading

Contrary to the truth, a popular opinion that prevails in the trading sphere is that the number of options that are available on the foreign exchange scene compared to the stock market is relatively low. The argument that is usually put forward is the fact that while stock traders get to benefit from thousands of stocks, forex traders only have the option of trading in 18 major currencies and a few pairs. While this is true, what traders fail to understand is the fact that 18 is plenty and all traders need are just two currency pairs to ensure success from forex trading in Sri Lanka.

Unlike the stock market, where the advice is to usually diversify the portfolio as wide as possible in order to limit exposure, in the forex market the best way to make consistent profits is to focus on a single currency pair and make riches from it.

Reasons Why Traders should Pick a Favorite Market and Stick to the Same:

• Helps in Specializing: By focusing on a single currency pair, traders can specialize in that particular market. They can analyze the movements of the market and learn in depth about its characteristics.
• Helps avoid over-trading: When traders take up a single currency pair, they get well acquainted with the risks involved in online trading and avoid over-trading.
• Helps prevent over-analysis: Such a style of trading removes the number of variables from the activity and makes it simpler. This helps avoid over-analysis and thereby, unexpected losses.
• Helps develop better risk management: Fear is a great motivator in trading. Since traders will have invested all their savings in a single currency, it motivates them to plan for risks and develop forex trading strategies that help mitigate risks in a better manner.

These are the reasons why traders should focus on a single market instead of trying their luck at several markets. However, focusing on a single market is not easy for novices as it takes enormous efforts and practice to understand the market in depth. Hence, it is advised that novices who take up forex trading partner with reputed online brokers in Sri Lanka like WesternFX who can offer the requisite guidance.