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.
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?