Trading can make you a lot of money if you do it right by following certain rules all the time. In this article i am going to focus on the commmon mistakes that most forex traders commit over and over again and how easly you can avoid them
If you are serious about becoming a profitable trader then do exactly the opposite of what you are about to read here.
let’s look at the 11 most common mistakes that Forex traders make. We will go into greater detail about each one below:
- Trading too many positions at once
- trading without a stop loss
- moving your stop loss too soon
- Moving stop loss in the opposite direction
- Not taking enough time to learn about forex trading
- Cutting your winning trades shot and letting your losing trades run
- Moving from one strategy to another
- Trading with complicated strategies
- Unrealistic expectations
- Focusing on small timeframes
#1. Trading too many positions at once
There is nothing wrong about having 3,4 or 5 positions running at once as long as those positions are not related to each other and all your positions are based on position sizing. However, there are some currency pairs that are related to each other. Some traders, especially inexperienced traders don’t know about correlation of currency pairs. many currency pairs tend to move in the same or opposite from one another. For example, A buy on EUR/USD can be the same as a buy on GBP/USD or a sell on GOLD or USD/CHF. Make sure you learn more about currency correlation unless you plan to trade one pair at the time. Also, opening too many positions at once decreases your free margin.
#2. trading without a stop loss
I can never begin to emphasize the importance of trading with a stop loss. Trading without stop loss means you don’t use money management system and you never going to last longer trading without a stop loss I tell you.
Every trade you take must have a stop loss that is based on position sizing. If you don’t know how to calculate position sizing make sure you read the post about position sizing.
#3. moving your stop loss too soon
It is very important to know how to manage your stop loss because sometimes the market price will hit your stop loss then move in your anticipated direction and leave you with a losing trade that would have made you a lot of money if you managed your stop loss well.
You need to know the best places to place your stop loss . I’ve written an article about when you should move your stop loss to monitor your readers.
#4. Moving stop loss in the opposite direction
No one and I mean no one make money in forex all the time. If you can’t take a loss then stay away from the market.
When I started trading forex, sometimes I would place a 40 pips stop loss then later move it when the price is about to hit it to avoid being stopped out with a loss instead of losing 40 pips I would end up losing 100 pips.
If you don’t want to take a small loss, why would you want to take an even larger loss?. moving your stop loss to avoid being taken out with loss is the same as trading without a stop loss.
Never move your stop loss in a direction a losing position because you don’t want to take a loss.
#5. Not taking enough time to learn about forex trading
If you are new to trading don’t rush to open a live trading account, take your time to educate yourself, buy books, heck you can find a lot of information from this site. Find a trading strategy that works for you then open a demo account and see how it goes before you can invest your real hard-earned money.
#6. Cutting your winning trades shot and letting your losing trades run
To trade well you must learn to accept losses as part of the game. The key is to keep them small as Possible. If you’re wrong, you are wrong. Accept it, learn and move on to the next trade.
Non profitable trades hold on to losing trades for way to long in hope the market will turn in their favor. When you’re wrong, you’re wrong just accept it and get out u can always catch the next trade.
Don’t allow losses to get out of hand. You must learn to cut losses very fast and hold on to winning trades.you are here to make money not to lose it.
#7. Moving from one trading strategy to another
Almost all traders has done this at some point during their leaning process and in return they ended up blowing their trading accounts.
Most novice traders tend to move from 1 trading strategy to another, one technical indicator to another because they think or believe that there is a secret to making millions in forex trading. Well let me tell you a “secret” about forex trading- there is no secret. Don’t be fooled by those ads you see all over the internet.
There are million ways of trading. You have to find a trading style that is right for you.
You can also join other traders in the private room to speed up your learning process.
#8. Trading with complicated trading strategies
Some traders believe that for a trading strategy to work, it has got be complicated. That is wrong mentality. Trading is very simple; it’s just not easy because we complicate it. Keep it simple and go with price action.
#9. Unrealistic expectations
Trading is not a get-rich-quick scheme. You can’t open a $200 account and expect to turn it into a million dollar account in a year. Forget it, it’s never going to happen.
Experienced traders are realistic with their goals, they know that anything can happen at any given time and there will be losing days. They know that market doesn’t always do what you expect it to do . They know that forex is about growing your account slowly over a long period of time.
“people want to become full time traders and create a career but then trade as if they have to retire tomorrow”
#10. Focus on small timeframes
Beginners like to trade on short-term charts like M1-H1 because they believe it will make them money fast, hence they have a get rich-quick mentality. Short time charts provide no value and has too much “noise”. Focus on daily,weekly, and monthly charts- they are more reliable.
Just because you are a trader it doesn’t mean you should always be trading. If there is nothing to trade stay away from the market.
Impatient trades feel the need to be always trading so they end up taking weak trades. Avoid taking weak trades and be patient enough to wait for strong setups that are formed on higher timeframes from daily timeframes
If you want to become a better trader learn from the mistakes of others. When I started trading forex I had no mentor to guide or help me and I made almost every mistake and for that I ended up blowing three trading accounts but I’ve learned from my mistakes. You are going to make some of these mistakes, but its very expensive if you try to make them all.
Learn from the mistakes of others. You can’t live long enough to make them all yourself
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