Here is a helpful guide to position trading in London.
Know what you’re getting into
Position trading is much different than buying into a deal at the same rate as someone else.
When you open this kind of position, you’re exposing yourself to exponentially increasing risk if prices take an unexpected turn before you close it out.
Remember, this isn’t a strategy for beginners who have never traded before and don’t know how leverage works.
It is one of the ways that professionals get bigger deals done – but if they miscalculate, the cost of their mistake could be far greater than what you’re able to put into your pocket.
Don’t underestimate the risks involved
Since you are only allowed to have one open position at any given time for this strategy, it means that you will not have the opportunity to be short on the other side of the market if things start going south on you quickly.
If prices plunge within a day or so after buying in, there is nothing else to do but ride out the storm and close your position later once they’ve levelled off.
No matter how confident you are about your analysis, remember that even professionals make mistakes from time to time – which is why most never risk more than 5% of their account with every trade.
Keep to approved brokers only
It helps if you consider several things before entering into a position trade with any broker.
Firstly, they have to be reputable enough that you feel confident about the safety of your money while it’s being held in their accounts – this alone should make sure that you never trust someone who at least ten other people have not vetted.
But it’s always good to look them up on Google as well if possible. Next, even though most platforms don’t charge commission for these types of deals, there are some out there that rely on “strategy fees”, which are subtracted from your account balance once per week or month
Lastly, keep an eye out for offers like unlimited free trades or bonuses for referrals – these can save you a lot of money in the long run if they’re available exclusively to favoured clients.
Test your strategy for free
Most brokers have their testing platform that allows you to enter into deals to see how much you would make (or lose) without putting any real money on the line.
It’s an excellent way to make sure that everything is working correctly before committing actual funds, and it’s also free
Some even allow you to adjust parameters like margin rate and other variables – which means that even experienced traders who are used to using this kind of strategy might want to try out some other numbers just for fun before drawing up action plans.
Be patient
This trading method is popular because it works, but slow and steady wins the race – so don’t rush into anything too quickly without proper analysis.
The London Stock Exchange opens at 8:00 AM GMT every weekday morning and closes at 4:30 PM – that’s plenty of time to get in on some sweet deals if you know how to approach them.
Never risk more than 1-5% of your account on any one deal
Remember that this is a “risk-multiplier” strategy – which means you can make some awesomely huge profits if everything goes according to plan… but the flipside of this is that when things fail (and they will, sometimes), you could end up losing more than you put in.
Since individual deals are only allowed to be worth 1-5% of your total holdings, it’s essential to keep that in mind.
Always use stop-loss orders
Every single expert trader will tell you that no matter how fantastic their work is or was, there are always going to be some deals that are just too complicated, too volatile or simply impossible to predict.
It’s why the best traders in the world use stop-loss orders.
These will automatically sell your shares when you reach a specific price point, so even if something terrible happens, your losses won’t go over what you allowed.
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