Diversification as defined by the American Heritage dictionary is: “To distribute (investments) among different companies or securities in order to limit losses in the event of a fall in a particular market or industry”.The primary goal of diversification is to “capitalize on returns” through investments in different areas so prevent a total wipe of your positions should the market turn against you. Nearly all investment specialists have the same opinion that, diversification is absolutely necessary to avoid risks for long-term investments.Just imagine that you have an account in Forex, and you only trade the EUR/USD, can you diversify your position?The answer is YES. A very resounding yes at that as well! Even if you trade just one currency pair you still should diversify your holdings. In a while we will go through just how to do that. Let us first explore the advantages and disadvantages of diversification in Forex.One of the advantages of having a diverse holding would create more stability in your account. Just image if one trade turns against you (which is highly likely) you have at least some other trades that would win. Thus your final profit and loss statements for a day will show a profit…. Read full this story
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