Forex Position Sizing Translates into Profit

Online, August 28, 2011 (Newswire.com) - InvestTechFX, a global provider in the Fx Trading market, provides a new analysis that shows the most important factor in realizing a profit from a Forex Trading account is the position size of trades. Position sizing directly translates to the fastest and highest possible returns.

Resist Diversification
It has been said that the greatest obstacle in obtaining profits from the Forex currency exchange is the temptation to diversify a portfolio. This is in direct contrast to the advice of the majority of financial experts who tell their clients that diversification is imperative in protecting from unforeseen disaster. The problem with diversification is that, while it does provide a layer of protection against disaster, it also protects the investor from high profits. No one ever got rich through diversification.

To realize the highest profits, investors should concentrate on one or two investments that are chosen after arduous and thorough research. When an investor has an adequate amount of reliable information, educated decisions on trades that can provide substantial gains can be made.

The world's top investors, such as Warren Buffet and George Soros understand this concept. They put millions or billions of dollars up in trades that end up bringing in millions or billions in returns overnight. Warren Buffet himself has made this knowledge public by stating that diversification doesn't make any sense for investors who understand what they are doing.

High Stakes Forex Trading
The foreign currency exchange is a market where large trades can be made with leveraged positions 24 hours per day. Even a small initial investment can be used to gain a large position. Positions can be entered quickly through an Forex ECN broker or through an online Forex account. Even though the risk seems enormous, it can be mitigated using stops that allow the investor to exit the trade before a substantial loss.

Trading through InvestTechFX provides investors with even more benefits. InvestTechFX offers straight-through processing (STP), and it is a no dealing desk (NDD) company that gives investors a ½ pip on all of the six major currencies. Clients can open an account using the MT4 platform with a deposit of as little as $5000. Leverage through this account is possible at a ratio of up to 500: 1. In addition, fixed spreads have been reduced on three of the majors from 0.5 pips to 0.2 pips, which will be available through 2011.

Fx Trading Risk
In assuming a high position, traders should be aware that risks do exist in the Forex Trading market. Therefore, this type of trading should be done only with money that they can afford to lose. In addition, traders must also set for themselves a strict guideline on what an acceptable amount is to lose on a single trade. In most circumstances, this should be about 2 to 3 percent of the total risk money, but in some cases, as much as 10 percent is still acceptable.

Don't Forget the Stops
Stop orders, also known as stop-market orders are very important in Forex Trading, whether it is through Forex ECN, a Forex online account or over the telephone with a broker. A stop order automatically buys or sells a security at a set point, ensuring the investor a predetermined exit point, which either mitigates losses or locks in profits. InvestTechFX recommends that every trade have a stop order associated with it even though their investors can never lose more than their deposit.