Jump to content
  • Daniel#MD
    Daniel#MD

    8 Trading Mistakes Every Forex Trader Should Avoid

       (0 reviews)

    In this article, we will summarize the 8 most common beginner mistakes in the forex market and how you can avoid them. Most traders learn from their own mistakes over many years in the markets.

    However, many of them will admit that had they known about these before they started trading, it would have saved them a lot of money. Still, some rules are so difficult to follow that it seems the only way to learn the lesson is to make the mistakes yourself first.

    Whether this is the case for you or not, here are 8 typical beginner forex mistakes that hopefully can make your trading journey less painful.

    1. Let a short-term trade become a long-term investment.

    This is something we often hear about, maybe more so from stock traders than forex traders, but it is nonetheless important to take note of. The trade you took didn't turn out exactly as planned, and to make yourself feel better you instead changed your perspective rather than admitting the loss.

    Admitting that you were wrong sometimes hurts your self-esteem, and it therefore feels better to hold on to your position while telling yourself that it will probably come right back next week…or even next month.

    Is this a good idea? NO! If the conditions for taking the trade in the first place are no longer present, you should get rid of your position as soon as possible and move on. There is no guarantee that your trade will come back in the future.

    2. Use automatic stop-loss.

    Forex educators and experienced traders always talk about using stop-loss in your trading. An automatic stop-loss order simply sends your order to the market if the price of whatever asset you are trading hits a predefined level. This sounds like a good idea in theory, because it is supposed to keep you safe and lower your risk in trading.

    However, it’s not always as good of an idea as you might think. There can be sharp fluctuations in a currency pair within a single day, and what you will often see is the price dropping down to your stop-loss level before it shoots right back up.

    Instead, check the price at the close of each candle. In other words, if you trade on the 1-hour chart, you check the price after each 1-hour candlestick has closed.

    If you trade on the daily chart, you check the price at the end of each day. If the price then has crossed your predefined mental stop-loss level, get out of the position.

    This way, you remain consistent about when and how your trading decisions are made.

    3. Watch the news.

    Well, watching some news is fine, but you should be very aware of how it impacts your decision-making. Unexpected news like Trump’s victory and Brexit tends to shake the forex markets, but it is almost impossible to trade these events for retail traders. When something unexpected happens, robots are the first to take action.

    Next, the professionals who may get the news faster than you place their trades, before the news finally reaches the millions of retail forex traders around the world.

    Therefore, instead of following the news, follow how the market is reacting to the news.

    4. Get too greedy.

    If you have set a target price for your trade, let's say a typical resistance level where you were planning to take your profit, make sure you do just that instead of holding on to your position in the hopes that it will continue with the strong momentum.

    Stick to your plan! The same applies if you are tempted to take profit because you see that you are up a few grand, but still below your predefined target. Do not focus on the money; focus on executing your plan.

    5. Get too scared.

    Lots of traders like to check news sites constantly in addition to reading discussions on various forums. It’s easy for these traders to get scared when they read negative news or opinions about the positions they are holding.

    Again, follow what the market is doing – the market is always right.

    6. Focusing too much on not losing money.

    Yes, it happens. You can actually lose money on a trade. In fact, your position may take a dip before it goes back up. Visualize how much you would allow your position to move into the red before selling it.

    If the currency you are trading goes down to test the support once again, by how much will you be in the red then before you sell? Always keep an idea of this in your mind to avoid selling at the bottom.

    7. Buying and selling without a plan.

    Buying and selling without any forex trading strategies, plan, or any system is the same as trading with your gut feel. It may score you a win when you are lucky, but over the long term it will lead to guaranteed failure in the forex market. Learn what works. Trade for a while just to learn how the markets work.

    Also, make sure to keep a detailed trading journal of everything you do so you can learn what works and what doesn't over time with real-world experience.

    8. Not investing enough time.

    The more time you spend on studies, jobs, research, or whatever it may be, the better you get at it. The same applies to trading. The market pays you for the time you spend on trying to understand it and educate yourself.

    There are no shortcuts to easy money in forex trading – hard work is the only way.

     

    About the author: Fredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He mainly follows the stock and forex markets, and is currently supporting Learn to Trade forex training services

    Edited by Daniel#MD


    Sign in to follow this  
    Sign in to follow this  

    User Feedback

    There are no reviews to display.


  • Forum New Topics

  • Links

  • Latest Videos

  • General Statistics

    4,671
    Total Topics
    40,145
    Total Posts
    29,345
    Total Members
    2,212
    Most Online
    John Dsouza
    Newest Member
    John Dsouza
    Joined 01/23/2018 12:45 PM


  • Categories

  • Posts

    • Buckle up the Tesla ride is going to be bumpy This looks like the time for traders to bet against Tesla (TSLA) shares in the short term as the market reacts to reports that Model 3 electric vehicle (EV) deliveries are going to be delayed with news stories about escalating production costs, production line issues and lay-offs throwing doubt on the company’s ability to turn a significant profit on its new model. The chart above shows that after steep rise of 68% throughout the year the share price is showing signs of volatility. Barclays were among the first to advise their clients to short Tesla with their analyst Brian Johnson suggesting a $210 price target – well below the $340 consensus on Wall Street. Barclays feel Tesla’s November 19 announcement about truck production will be decisive in swaying investor confidence in the company. Tesla are projecting production targets of several million per year in the near future as well as significant progress in other business opportunities like battery storage. On the back of these projections some analysts have been uber-bullish about Tesla with Morgan Stanley’s Adam Jonas – who is widely followed on Wall Street – raising his 12-month price target from $317 to $379. Jonas is basing his outlook on a long-term perspective. Traditional manufacturers, like General Motors, have revealed plans to roll out their own EVs raising fears about Tesla’s ability to handle competition. However, Tesla have already made a huge investment in infrastructure for EVs (over $8 billion), on service centres, stores, galleries and the world’s largest battery factory as well as proprietary investment in superchargers and destination chargers globally. And this is where Tesla have a significant advantage over traditional manufactures.
      For more detail : Buckle up the Tesla ride is going to be bumpy
    • Historical volatility
      Historical volatility reflects the past price movements of an underlying asset. Generally, this is calculated by determining the average deviation from the average price of a financial instrument in the given time period. Historical volatility is important because it helps to predict future price movements and estimate or calculate risk.
  • Most Viewed Topics

×