Trading is all about making money and one of the most asked questions is “How can I make more money?”. There are mainly 5 different ways ‘to make more money’ in trading that we will discuss in the following article. We will lay out the possible problems that you might run into and what to be aware of when trying to increase your trading performance.
1. Trade More Instruments
Once you have a tested and proven trading strategy, the most obvious thing to do to get more trades and increase yourperformance is to add more instruments to the ones you are already trading. Whereas this seems like a smart thing to do, it brings a variety of problems that will not only not increase your performance, but will undoubtedly result in a lower trading performance. The reasons why just adding more instruments to your arsenal and keep doing the same things won’t work are the following:
1. Different instruments behave differently regarding overall volatility and general price behavior. Therefore, the stop loss and take profit strategies that work on one instrument, may not work on another one. Whereas one instrument follows certain patterns accurately, a different instrument may not respect technical rules at all, or respond to a different approach.
2. Furthermore, adding correlated instruments increases risk to your overall trading performance. When trading correlated pairs, price moves similar and, therefore, the outcome of trades will be similar. In short, by trading correlated instruments you mainly just increase risk due to a greater exposure.
The graphs below show the percentage price change of 4 different instruments, three of them are big US corporations and included in the Dow Jones Index. You can see that although they are included in the same index, the way they move and behave is significantly different. Thus, taking one profitable strategy and blindly applying it to different instruments will not automatically result in an increased performance.
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