Looking at how smartly active traders are making money and how long passive traders are waiting for profits, a novice trader may want to dramatically change their strategy. But having started active trading without the necessary preparation, one may lose a lot of money. The reason is that active or aggressive trading requires deeper financial knowledge. You can easily earn several times more after receiving the necessary base. The reason for this is the ability of an active trader to take profits much more often.
What Are the Characteristics of Active Traders?
Profit in the currency trading market is obtained by buying/selling currencies at the moment of a trend change and reselling/repurchasing at the moment when the trend reverses. Active traders understand that the more such peak moments they catch, the higher their earnings will be. Therefore, they:
- read analytical reports and forecasts, learn different methods of making a prognosis
- study the experience of other traders and perfectly know technical analysis
- learn the features of the application of various indicators
- experiment with different strategies on MT4 for PC
- often take risks in the hope of making a profit
- watch currency fluctuations 24/7
- open several deals during the day
Consider a Passive Trader for Contrast
- A passive trader has little interest in analytics. They usually get the gist of what they can make money on but won’t be interested in the details. Moreover, they will not read regular analytical reports.
- They open no more than one trade per day. With more intensive trading, they need to pay more attention to this than they are willing to give.
- Most often, passive traders rely on brokers.
Why Active Traders Earn More
The reasons for the higher earnings of active traders are easily explained:
- During the day, the exchange rate fluctuates, and if you closely monitor it, profits can be withdrawn more frequently.
- If a trader does not pay attention to these price fluctuations during the day, they simply have less opportunity to make a profit.
- When a trader uses short-term trades with a time frame of no more than an hour, they can risk with a leverage of 1:100, which means that the profit will incredibly scale. A passive trader who does not work with such a tight time frame will not take risks with such high leverage because it can lead to significant losses.
How to Move from Passive to Active Trading
Looking at the success of active traders, you may be wondering what is the best way to make this transition between the two fundamental strategies. Is it really necessary to go to some educational institution and study the intricacies of financial analysis for several years before taking the risk of mastering active strategies?
Modern popular trading platforms, such as MT4 and MT5, offer a unique opportunity titled CopyTrade. It can become your reliable bridge to the world of active trading.
What Is the Point of Copy Trading?
Active traders are so active that they are happy to share their knowledge with others. And they make money even on this because, by participating in the copy trading program and allowing new traders to follow their strategies, professionals receive their commissions for this.
- What an experienced trader does: they go about their daily routine. But this habitual activity is fascinating to them and charged with passion and excitement. At the same time, when trading Forex, they activate a function that allows others to copy strategies. They are not engaged in anything additional.
- What a novice trader does: they also don’t undertake anything special at first. They select from the proposed traders the one whose strategy they want to copy entirely or in part and turn on the copy function. The MT4 trading platform will do this automatically.
The Difference Between a Passive and Active Trader on the Example of Copy Trading
- A passive trader will stop there. They will automatically copy the strategy of an experienced trader and get their profit. If the profit seems insignificant to them, they will change the trader whose strategy they follow.
- An active trader will begin to study in detail the strategies that they copy. They will watch when the strategy works in plus and when it works in minus. They will start asking questions of the trader whose strategies they are copying. And, as a result, following the master, they will very quickly become a master themselves. When they feel confident enough, they will begin to take risks and trade on their own. This way, the beginner will turn into an active trader.
The life of active traders is interesting, reckless, and exciting. Their emotions during the day can often change depending on whether they make a profit or make mistakes and suffers losses. And this saturates their life with great energy, which they also actively spend with pleasure on other things and on continuing to engage in active trading.
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