Most Common Forex Trading Mistakes you should Avoid
Forex, being a low barrier market, attracts plenty of new traders everyday but these novice traders often forget that ease of entry to the market is not a promise of big profits. It’s normal for the mistakes to crop out but it’s not normal if you are not willing to correct them because this way you’ll keep losing over and over again.
This is why, in this article we’ve outlined the most common forex trading mistakes that you should avoid for an efficient trading experience:
- Not learning and practicing enough
The biggest mistake that new traders make is believing that they can exceed without proper knowledge. They are usually too excited to make money that they often ignore the need to educate themselves about the market and how it works. Not only should a trader learn about different trading concepts but should also keep themselves abreast with the upcoming news that may impact the market. Also, it’s not enough to learn as long as you haven’t practiced your skills enough on a demo account. Once you are prepared and ready to start trading, not just directly jump into the live market with all your capital but trade on a small account for a few weeks until you adapt yourself to live market conditions. You can use brokers, such as Coinexx, Litefinance, Turnkey Forex and LMFX as they all offer micro trading accounts.
- Not having a trading Plan
Trading without a plan is like diving underwater without a compass because you’ll never be able to navigate the path towards your goals. A trading plan is very important as it allows you to plan things like when to enter the market, where to set your stop loss and take profit, how much money to put at risk, which currency pair to trade, etc. Following a plan brings consistency and directs a trader towards taking better trading decisions.
This often happens when a trader thinks that there are too many market opportunities that they can take advantage of while in reality, they are incapable of handling all the financial and mental stress. It’s true that you will be tempted to make certain trades that seem obvious. But it’s important to clear all the reasons in your mind why this trade is worth opening positions in.
- Taking Big Risks
Another major mistake that traders often make is risking more than they can afford to lose. Some traders over-leverage their positions as if it’ll miraculously grow their account. However, before using high leverage, you should familiarise yourself with all the associated risk so that you don’t end up blowing your account. Moreover, you shouldn’t risk more than 2% per trade if you don’t want to lose all your capital at once and be knocked out of the market.
In the end, remember that among a large number of traders who try their hands on trading, only a small minority of traders actually succeed and if you want to be the part of that minority, you have to avoid these common mistakes that all the unsuccessful traders make.
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