Home Investing The Biggest Forex Trading Mistakes You Should Avoid

The Biggest Forex Trading Mistakes You Should Avoid

393
6

Trading on foreign exchange (Forex) markets is yet another way to earn an income.

The problem is that many also lose money, since they lack the knowledge and discipline to become successful.

Here are the biggest mistakes you can make with Forex trading:

Not testing enough

There are countless test Forex accounts.

Switch companies, if you have test traded for a while and still cannot seem to get the hang of it.

Don’t start spending real money, until you see some results. Otherwise, you’re gonna lose YOUR money and it won’t be pleasant.

Not getting informed well enough

Right now countless websites provide accurate stats and trading insights (such as BinaryUno).

Details, statistics and tips for you to get better results with your trading. Make sure you do your homework.

Not having a trading plan

Forex is NOT gambling. It’s not related to luck or sheer inspiration.

These seldom work for seasoned traders and, while you might get lucky few times, you’ll lose money on the long run.

Set a system. A plan. And be consistent.

Being emotional

When it comes to business, emotions will only ruin it. It’s the same with your Forex investments.

Don’t do it if you are stressed out. If you are too happy or sad.

If you cannot trade calmly, then skip it. Or use one of your systems which will prevent any emotional decisions.

Not caring about the news

Most of us hate the news and couldn’t care less about what’s happening in some remote country.

But, since you’re trading currency that’s international, you should pay attention to what’s happening as well. Politics and economics, while horribly boring for some, are absolutely relevant for someone in the currency exchange market.

Not using a stop loss

This can have catastrophic effects, since it leaves your account exposed. Depending on the leverage you have, your can blow off your capital in an instant.

A stop loss defines your risk in the trading market and it protects you, if the trade doesn’t work. Instead of losing a lot of money you can cut your losses, if the market is moving against you.

Risking too much of your capital

Beginner traders think that huge risks bring huge results.

But it’s not always the case, since risking a lot will bring in loses in the long run.

A common rule is that a trader should risk about 1% of capital (difference between entry and stop price) in a single trade, or even less.

What other Forex trading mistakes would you add?

6 COMMENTS

  1. I’m a beginner trader myself and I can’t stress enough how important it is to make good use of test Forex accounts! Investing isn’t actually that complicated, once you get the hang of it, but make the wrong move and you can end up losing money! Which is the opposite effect, really.

  2. I have lost a lot of money in forex and still can’t stop because it has become an addiction. Testing or elaborate research does not seem to work and all the market experts are like doctors who keep on changing their prescription. But, still one can make small profits if it is done with a stop-loss and not trying to scale much.

  3. This is a good list of items. Another important mistake is to not use a trading journal. Using a trading journal makes your trading more precise. It allows you to later look back and detect why you entered the trades that you did. Many successful traders speak of the importance of using a trading journal.

  4. I’d like to emphasize too making the most out of demo accounts. Don’t rush in to trade with a live account, until you truly understand it. While the platforms are just so easy to use with just simple clicks of the button, not knowing the mechanics behind the trade could really make you lose a lot of money. Be patient and study, study, study. Otherwise, you’ll truly lose big time here.
    tabby recently posted…my stock market journey with COL Financial IncMy Profile

  5. Another way to lose money is to bet against the market. If you’re not George Soros, have an insanely high account, the market can continue it’s absurd trend long time after you have lost all your money.

    For instance, if the market is bullish, don’t short thinking that the bubble will blow. If you set a stop loss, you will most certainly lose money and if you don’t set a stop loss, your account may reach the negative area before you could realize what happened.

  6. I would add that new traders should start with a small amount of money. Almost everyone will start out losing money so it doesn’t make sense to trade larger amounts until “earning one’s stripes” – gaining experience and greater understanding of the markets through small trades.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

*

CommentLuv badge