They say that the fools learn from their own mistakes while wise folks learn from the mistakes of others.
But what stops other traders form being successful? Where most people are making attempts to make money, a minor mistake proves to be very costly.
Like most businesses, forex trading requires guidelines, as well as principles traders, must follow.
Mistakes are always part of a continuous learning process, and hence traders have to habitually familiarize with them so that they can avoid repeating wrongdoings. Here are the most common worst forex mistakes a trader should avoid.
Trading without a Plan
Starting trading forex is merely like asking the market politely to swallow your money.
If the market moves that it favors you when you are supposed to take the profit? What if it moves against you, at what point will you cut the losses?
It means that without defining such levels from the start, you’ll surely lose in forex.
Without a trading plan is like gambling in your trades – trading on luck. Sometimes, success can make you money. But over time, chances of winning your money are against you.
Lack of Risk Management
Without managing the risks, it is risking losing money. Sometimes reality has to apply in forex trading that it’s not always about making profits, but losses also happen.
Therefore, a trade has to count the money to risk per trade in a day. Keeping potential losses limited is a sure way of staying in the market for an extended period with more opportunities.
Nobody wants to lose-in fact; it doesn’t feel good to lose as it can result in one being irrational and emotional.
In such a situation, most traders would want to follow-up trades outside the trading plan. Usually, such attempts result in huge losses.
One thing for sure, no trader has great trade all the time. Always accept losses as part of reality in forex trading and forever stick to the plan.
Remember that in the long run, the trading plan will compensate for the loss or simply review your trading plan if not.
Another common mistake traders do is to trade too much than the available margin.
What a trader needs is to familiarize with margin as well as leverage to avoid accidentally letting too much capital at risk than planned.
Forex education is very critical, and traders need to invest a lot in research to help execute accurate trading strategies.
Studying the market properly brings some light to the market trends, fundamental influences as well as the timing of the entry and exit points.
With a lot of dedication to the forex market, a trader gets more understanding about the market in general. Besides, it’s required that before getting into any trade, proper homework be done.
Failure to Adapt to the Market Conditions
The forex market conditions keep changing, meaning that a trader’s trading approach also needs to flexible to adapt to the changes.
Moreover, most traders tend to ignore the news releases as well as data releases that affect the market.
Ignoring news releases is a huge mistake that should be avoided by planning trades as well as consulting the economic calendar.
Setting Wrong Goals
The way to go in forex trading is always doing the right thing, even if it means making a small profit.
Chasing money in forex is usually the reason why most beginner traders have gone packing as it leads to breaking of the rules of a trading plan.
The fact is for a trader to hit singles and then stay in the game longer. Being realistic is crucial when setting the trading plan parameters, not to expect too much.
The Bottom Line
Mistakes are common in forex trading, but how to handle and avoid them is what defines a successful forex trader.
To be on the positive side, a trader needs always to trade with a plan, set realistic goals, keeps emotions aside, manage risks, and be flexible.
Nevertheless, trading forex is profitable only when doing the right things all the time.