As we progress with our normal lives, it is evident that we make mistakes. Making mistakes is
not a crime, but failing to avoid these mistakes is. When forex trading, there are several mistakes
traders make, which at times end up leaving you frustrated. Beginners with little knowledge
about trading mostly find themselves in a tight spot because of errors that could have been
avoided. It is best for you if you familiarize yourself with the mistakes which traders do and
figure out how you can prevent them.
Lack of a plan.
When doing anything in life, all of us usually come up with a plan. Failing to plan is planning to
fail. Before you start trading, do some research an analyze your data to come up with a well
detailed and eligible plan. Your plan should have in it the strategy you will use when trading,
how you will get capital, and the software you will likely use when trading. Any business or
investment requires a well laid out plan to succeed; you cannot just wake up and start selling.
Lack of Stop loss
Even if you are sure that you will 100% gain profits, it is always advisable to set a stop loss. The
forex market is highly volatile, and even the smallest new can cause drastic changes in the
market prices. You can never know when this can happen, and therefore you should always have
a stop loss to ensure that you do not suffer when things suddenly go haywire.
Adding on to a losing trade
When traders see that a trade position is going to be lost, they tend to add more funds to it so that
it does not work in a loss. This practice is not healthy since you can end up making decisions
hastily since you are under panic. Your judgment is overcrowded at the moment, and you end up
making chaotic decisions, which will inevitably lead to even more significant losses. Always
stick to your initial choice and if a trade leads to an injury, study the cause so that you can learn
from your mistakes. By doing so, you will have saved yourself the stress and shock after
realizing that you have been adding on an unprofitable trade, which has, in the end, made you
lose a lot of money. Life promises better outcomes if we learn from our mistakes.
Lack of risk management
Traders who only think of profits and don't set up risk management protocols can end up losing
everything. Do not allow yourself to feel only of benefits and lack a plan for risk management.
Always stick to the rule of 1% risk in each trade. If you manage to reduce potential risks, you
can stay in the game for longer and make more profit from forex trading.
Trading newbies have a cultivated culture that they can at least earn 20% profit within one year
of trading. This, however, is a fairy tale. Setting unrealistic goals will see you fail all the time.
You should hold your nerve while trading and bite that which you can chew comfortably. For
you to realize this kind of profit, you must be an exceptional trader with years of experience in a
trading education background.
Not paying attention to the latest news
This is what is destroying people when they are trading. Always read the latest news release so
that you do not make decisions which have been overruled without your knowledge. Keeping
yourself updated will allow you to make correct trading decisions, and you will be taking a step
closer to successful trading.
To wrap things up, traders should equip themselves with a plan before trading. Try doing a demo
before the actual trading. Issues of risk management and setting stop-loss parameters should also
be adhered to. Avoiding these mistakes ensures that you make money stress free and efficient.