If you are already engaging in forex trading, or if you have been considering giving it a try, then there is a good chance that you have made at least one of the mistakes described below.
These common mistakes can come back to haunt every trader, and unfortunately, they usually do so within a few months of engagement.
1. You are expecting too much from your first trades.
It is not unusual for people who have just begun their careers as forex traders to expect certain things from their very first deals.
This applies especially where beginners use automated systems that supposedly generate an income even though the traders themselves may do nothing other than set up the robots and wait for them to work magic.
It takes time and dedication for people who are serious about earning money from trades. It requires patience as well since there is no such thing as instant success.
2. Making decisions based on emotions rather than facts
The fact that a trader’s mind seems prepared for this type of mistake is not surprising: it has been shown that traders who base their decisions on feelings and emotions rather than on facts and figures will be more likely to lose money.
Most people tend to believe that they can read the market better than the professionals, but, in reality, chart analysis does not work for beginners because their conclusions are usually subjective and often inaccurate. Look at this site for professional traders.
3. You are letting your losses run too far.
Many beginner traders mistake calling positions too early, especially when they have a string of losing trades behind them, where they try to cut their losses by placing an exit order before prices go against them even further. As a result, the trader loses roughly two traders for each associate.
The fact is that seasoned professionals continue to incur losses on their trades even after months or years of trading experience. This extends even to those who act as mentors for newcomers.
So if you want to avoid financial loss, it is essential not to expect too much from your first trades.
4. Relying solely on one form of analysis
This mistake works the other way round, too, because there are plenty of examples where people have lost money despite using more than one strategy or system at a time.
We all know how complex trading is, so it makes sense not to rely upon any single technique when forecasting market directions.
When we look at historical trends, we should always be mindful that similar patterns may not recur.
5. Not defining entry and exit points enough.
This mistake is so common because it takes a certain amount of experience to know where best to set our stop losses or take profits.
Inexperienced traders often find themselves caught up in the emotion of trading, with the result that they tend to make mistakes when setting their exit strategies.
This can be particularly true where beginners use high leverage settings, which only amplify market volatility. While taking too little risk is a bad thing for a trader, taking on levels of exposure that your account balance cannot sustain is even worse!
6. You are linking every trade you make directly with commission costs.
The truth of the matter is that this mistake can affect both experienced and new traders alike, so there is no reason why you should accuse yourself of making it.
One way of avoiding the connection between trading costs and your failures is to always keep in mind that trading decisions are supposed to be based on market forecasts, not just on commissions or spreads.
7. Believing that every job requires only one profession
Many forex beginners tend to trade their first markets without having held down a job first, especially if they have completed school recently.
The problem with doing this is that newcomers often believe they know more about the ins and outs of jobs than anyone else, without realizing that some jobs are better suited for completing school first.
The fact of the matter is that most professionals have undergone several years of training before they are allowed to work independently, so thinking you can start on your chosen career straight away will often lead to disappointment.
Therefore, it may be a good idea for you to delay taking forex courses until you have spent at least two or three years working in another profession beforehand.
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