Are you a Forex trader? Or are you someone interested in getting your feet wet in this venture? Don’t go full force on it just yet; learn and avoid the forex trading mistakes traders make so that you have less chances of committing them yourself.
Thinking Too Much
There are literally thousands of methods you can apply to your portfolio as a forex trader. To add, there are tons of trading platforms out there available for you to try out.
What’s wrong with trying to realize which among them will give you the best profits? Nothing; but your efforts will all go haywire when you try to sift through every variable out there, hoping to squeeze every drop of profit available.
Found one method that works for you? Then for now, stick to it. As long as it proves effective, then it’ll do just fine.
No Solid Trading Plan
Too cliché, but it’s true: failing to prepare is preparing to fail. You can’t just go trading without a plan, especially if you’re a beginner. Traders who get in there with a plan lose money – what more for you, who doesn’t have a concrete plan of action?
Not having a strategy will make you lose money sooner than you can say “forex”. How? By overtrading and/or trading on emotions. And that’s not good. You need to have a solid trading strategy to keep you guided and focused.
Poor Risk Management
Yes, it’s true that the higher the risk, the higher the reward… but that doesn’t mean you’d go all out placing everything on the line just to reap the best rewards. You still have to apply the right risk management strategies, and trade according to your risk tolerance.
Find out what your risk tolerance levels are, and consider the factors that’ll contribute to it. How much have you already invested? How much money do you have available to add to your investment? Are you in a position to lose money? How much have you gained?
Finding out your risk tolerance levels will make you realize what will be your best position with regard to forex, and in the long run give you a better forex trading experience.
Trading Too Soon
Sure, you’re excited – especially if you’ve tried out demo accounts and experienced how it feels like to reap profits through forex. However, trading in demo accounts is different: it doesn’t involve real money just yet. You can go and be speculative all you want, and you end up losing nothing.
Don’t take it the wrong way though – you’re using the demo accounts the right way. It’s there to help you find your comfort zone and find out which strategy suits you the most. Achieved consistency in reaping profits using your strategy without risking too much? You’re on the right track.
Remember that you’re trying to penetrate the forex market to gain profits, and not the other way around. Being a strategic forex trader means you’re calm and not trading on emotions, and that you’re taking careful and calculated risks.
Overanalyzing, not having a solid trading plan, having poor concepts of risk management and trading too soon are just few of the common mistakes forex traders commit. Are you guilty of these mistakes yourselves?
If you answered ‘yes’, then don’t lose hope. It’s not yet too late. Maybe you can no longer get back the money you’ve lost, but by avoiding these mistakes, you can start all over and be a more effective forex trader.