5 Big Mistakes Forex Traders Make and How To Avoid Them
Every Forex trader, even an experienced one, commits mistakes in the process of trading. Most people realize this very fact, yet they still count on their luck or bad habits, which may work sometimes. These things have nothing to do with the professional approach that guarantees long-term success. In this article, we discuss the seven main mistakes both advanced and beginner Forex traders make, with a few tips added on how to make more profitable trades.
Trading for fun
Forex is one of the most interesting and rewarding businesses, but it definitely is no game at all. Never enter a position simply because you have nothing to do or are bored. Discipline is key to your success, and traders should always follow the market trend and avoid getting in the market from time to time to just try their luck. Never seek amusement, and always follow a well-defined schedule.
Trade only on small frames
One of the biggest mistakes of amateur traders is looking for a short-term chart analysis. Of course, shorter-term charts take less time to analyze and are simpler, but they are giving less information as well. To be able to trace the market changes and predict a currency’s future state, one should look at its long-term charts. Although long-term charts require more investigation and may be more difficult to analyze, they also provide more information, and the more information you receive the less probably you’ll make a mistake in analyzing the market.
Over-trading with emotions
Every forex trader should know precisely what his limits are in respect to trading style and emotional resistance. n case you let your emotions rule you, then you will have a lot of problems. The smartest thing you can do, once you feel angry or pissed off, is to take the day off. Only when calm and cool could you then come back and start all over again with trading. Same thing goes with impatient newbies who want to get rich overnight. Any moment the feeling of this inner rush to open a position and carrying out lots of transactions, it is wise to sit back and start transacting calmly.
Too much confidence in the wrong interpretation of the signals
Most people consider trading signals the surest means whereby their analysis errors would be reduced and would definitely guarantee increased profits from trading; however, the source from where the signal was received is also an important factor. In today’s world, thousands of channels, sites, and groups publish trading signals. You should know that the biggest part of these signals can be given out for personal gain and not for your benefit Never forget to be suspicious about the signals and use them with care.
Too much trading
This mistake is very closely associated with emotions such as euphoria and anger. Every time you exit a trade, whether in success or in failure, remind yourself that you have a strict plan to be followed. Just because one wants to be in the market again, one should not start trading; one should instead be more patient, with each trade well thought out and analyzed.
If you are a beginner trader, then you should open a forex demo account so that you can learn by trading in it. By the time you are confident about your trade, you can switch to live trades. You can implement all your skills in live trade and take benefit from the live market opportunities.