Bond trading is a different kind of trading business. In this sector, you can trade like the technical traders of Singapore. The news is very important since it can cause a massive change in the bond price. People who have a fair knowledge of economics knows the role of the news factor in the bond market. But don’t get panicked since you don’t have to get a degree in economics. Many investors are successfully taking trades in the bond market and they don’t have any problems. They are good at doing critical market data analysis. Being the rookie in this industry, you should be reading this article by heart. We will teach you how to avoid some of the biggest mistakes that are committed to the bond trading industry.
Overtrading becomes a serious problem when you take trades in the bond market. You may say, you just execute 2-3 trades per day but still losing money. As a bond trader, the time frame that you should consider as your reference point for overtrading should be the week. In fact, many experts’ execute 1 or two trades in the bond market per month. Though you can have a few trades per month, it’s a long term game. Taking moves based on the shorter time frame price movement will result in significant losses. So, study hard and try to know the concept of overtrading for this profession. Never be crazy about the trade setups since you will always get the opportunity.
Trading the reversal
In the currency market, we can get a decent profit by trading reversal. But at bond trading, we don’t have the option to trade the major reversal. Get a professional demo account and try to study the price movement of the bond market. Visit this website and get access to the SaxoTraderPro platform. Use their free tools and see if you can find any potential setup in the reversal trading method. Seeing the strong trending nature of the price, you should not have the courage to trade the reversal. During your strategy development phase, focus on the different stages of a trend. It should give you a decent idea of where to take trades and which order you should ignore.
Ignoring the chart pattern
We have said reversal trading is hard but it is not impossible. People who don’t have any skills to spot major chart patterns won’t understand how the reversal trading method works. Most of the reversal chart pattern gives big profit potential to the investors. Before you move to the chart pattern trading technique, be sure the analytical time frame is daily or weekly. Choosing the hourly time frame is not going to work in the chart pattern trading technique. Evaluate the previous chart pattern in the chart and you should notice the daily time frame chart pattern has the best success rate. So, select the time frame accordingly. Never become a greedy trader and switch to a lower time frame just to earn more.
Depending on the leverage
The professional bond traders love to trade with low leverage account. On the contrary, the rookies are searching for the low-end broker who is willing to give unlimited leverage. You can open big volume trades with such a broker but the chance of blowing the up account is very high. The leverage of the account should not exceed 1:10. If it does, you must be excellent knowledge of money management. But having skills in managing the losses is not enough. You should have the courage to accept the losses. Developing such a mindset can take years. So, it’s a big mistake when you get busy with the high-risk trading strategy. Keep the risk low in every possible way and never become aggressive with your steps. Follow the basic investment rules and create a decent trading routine that gives you the chance to look for potential signals at specific times.