Collective trading in the forex market
As life shows, teamwork in any area, as a rule, allows you to achieve better results in comparison with independent activity. And this is understandable. Joint generation of ideas and optimal distribution of responsibilities create conditions for high-quality performance of the task. What about trading? How justified is collective trading in the forex market ? Let's try to find the answer to this question.
Collective trading involves a trading scheme in which two or more traders are united. They analyze the market situation and make a collective trading decision. At the same time, the risks that are always present in trading are distributed among all traders in the group. This type of trade has been used in practice many times. And therefore, it is already possible to draw some conclusions about the advantages and disadvantages of collective trading.
The benefits of collective trading
As traders who are engaged in collective trading note, the following points can be attributed to its main advantages.
This type of trading allows you to have a significant amount of funds on your trading account. This means opening larger transactions without violating the rules for reducing risks.
Trading efficiency is increased due to the fact that decisions on opening deals are made collectively based on the results of market analysis carried out by each of the traders. The coincidence in the assessments of the market situation increases the quality of the trading decision.
Collective trading in the forex market allows you to trade 24 hours a day. To do this, traders just need to distribute among themselves the "watch" time in the market. And if the market situation develops according to an unexpected scenario, then the “on-duty” trader will be able to make the right decision.
Of course, all these advantages will only become real if the traders in the group have sufficient trading experience and trust each other.
Disadvantages of collective trading
It is better to refuse such trading if there is no mutual understanding and trust between traders. In this case, trading will not bring the desired result.
Suppose each of the traders evaluates the market situation differently and does not want to consider the opinions of their colleagues. As a result, the trade order does not open at all. Or it is opened by the decision of one of the traders, and if the deal is closed with a loss, this will only exacerbate the conflict situation.
And yet, as practice shows, conflicts arise in the process of income distribution. This happens when traders agree to trade in turns during the day or on days of the week. As a result, each of them evaluates differently their contribution to the resulting profit or the fault associated with losing trades.
From the above, we can conclude that collective trading in the forex market has its own difficulties and is not suitable for everyone. Psychological incompatibility and different levels of trading experience and knowledge will lead to negative results.