Common mistakes in Forex market trading and how to avoid them?
Last Updated on July 5, 2021
One of the most effective ways to achieve success in the forex market is to focus on getting rid of mistakes, which is very effective advice to follow to make the right decisions.
Here are five mistakes to avoid when trading in the forex market for beginners If you can avoid these five mistakes, you will immediately see a huge improvement in your success rate.
Lack of search in Forex market
This first option may seem obvious, but many traders, even those with years of experience, fail to care about the necessity of research.
Currency pairs prices are influenced by global, regional, and national economies, and in the never-ending news cycle, there is always the latest news that either confirms or appears to oppose economic trends.
Before making any trade, make sure you are aware of the following:
1. Current news related to the economics of the pair you are trading.
2. Upcoming data releases or planned government meetings from the economic calendar.
Never skip this step, even if you think you’re following an impeccable strategy.
Not accepting losses
Confidence is an important part of the success of day traders. Without enough confidence, you will deviate greatly from your strategy. Confidence is closely related to the idea that losing is part of the game.
Losses can push you to abandon your strategy and make unnecessary trades to make up for your recent loss, especially if you have had several losses in a row.
Mistakes lead to irrational decisions that can result in more mistakes and deepen them. You have to stop telling yourself that you can turn them around quickly. Instead, learn how to deal with losses.
Learn to accept that losing is part of the game, if you are chasing losses, you are not trading but gambling.
There is no maximum risk
One of the most important concepts in risk management is realizing your willingness to risk, there is an unwritten rule in day trading that you should never risk more than 1% of your total capital on a single trade.
You need to know the size of the margin and the leverage to make sure you know how much to risk on each trade, if you are not familiar with these concepts, one day you will make a mistake and risk more than you would like to lose.
In addition to having a percentage that you are willing to risk on each trade, you should also have a number that you are willing to risk daily, these caps will serve you well in the long run, if you don’t deviate from them you will give yourself every chance to stay in the game long enough to develop a strategy profit.
Not using the demo account
Many things really change when you move from a demo account to a real account, firstly, the feelings of trading with your hard-earned money cannot be replicated by trading virtual money in the demo account.
Also, many brokers will not replicate the exact real trading environment in the demo account environment, they may use their best trading conditions which may only be available on their best account.
However, the demo account remains one of the really best ways to practice your strategy and sharpen your understanding of the markets, if you cannot trade successfully with calm feelings and favourable trading conditions, you will not be able to trade with real money and higher spreads.
Once you have consistently profited from your demo account, it becomes a matter of keeping your emotions in check and securing the most favourable trading conditions on your live account. A calm trader who is aware of their trading conditions should be able to replicate their demo success, provided it is the result of a sound strategy. And strong.
Choosing the wrong broker
The most important research you will ever do for your trading is to find a regulated trading broker, where there is insurance to protect your money.
When you choose your broker, test their services in small volumes first, withdraw to see how quickly you receive your money, if any transaction fees were charged to you, and if you received the full amount you requested.
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