There is nothing sadder than to see the newbie traders loose their initial deposits on Forex trading. In this article we would like to discuss some common trading mistakes and help the beginner traders muster the skills of a Forex trader.
The first mistake is an attempt to start trading Forex from day-trading. That means trading within a day on short-term charts mistakenly thinking that this way traders can earn much more money. In reality it is certainly a myth. Day trading is recommended to the professional traders only who have many years of experience in Forex trading. The reason is that on day trading a trader must make correct decisions immediately, not basing on the market analysis so much, but rather on the basis of his intuition and big trading experience. If you don’t have much trading experience and skills, it is almost impossible to succeed on day trading. The beginner traders are recommended to start their online trading career from technical and fundamental analysis on 24 hours time frame charts. Though it takes more time, this trading strategy is less risky and will help you gain a valuable trading experience.
The second and the most common mistake is trading against the trend. Half of the beginner traders on Forex market loose their deposits for this reason. There is a rule on Forex market: trend is your friend. Don’t think that you are cleverer than the others. When there is a trend, you must trade with a crowd in order to make profit.
The third mistake is too much trust to various indicators, automatically trading systems, popular analysts and guru of the financial markets. Remember that the decision about trading must be only yours. It is your money that you invest and trade with and if you loose due to the recommendations of a guru, indicators or other assistants mentioned above, none of them will take responsibility for your losses. Furthermore, making the trading decisions based on your own analysis, you are gaining a valuable experience that will be very helpful and useful in the future.
And finally, the fourth error in Forex trading is the lack of an organized trading plan and your own trading strategy. At any time, disregarding on the market’s behavior you should know what to do at the moment. In order to make your trading organized and less risky we recommend (especially to the beginners) keep a diary where the following points of Forex trading must be noted.
It is very important when choosing the moment of opening a trading position follow the ratio of at least 2:1 of profit to losses. But in general the more profitable positions you have, the better. Following all the rules mentioned above will help you earn in any financial markets including Forex.
Source: Forexarticlecollection.com
The first mistake is an attempt to start trading Forex from day-trading. That means trading within a day on short-term charts mistakenly thinking that this way traders can earn much more money. In reality it is certainly a myth. Day trading is recommended to the professional traders only who have many years of experience in Forex trading. The reason is that on day trading a trader must make correct decisions immediately, not basing on the market analysis so much, but rather on the basis of his intuition and big trading experience. If you don’t have much trading experience and skills, it is almost impossible to succeed on day trading. The beginner traders are recommended to start their online trading career from technical and fundamental analysis on 24 hours time frame charts. Though it takes more time, this trading strategy is less risky and will help you gain a valuable trading experience.
The second and the most common mistake is trading against the trend. Half of the beginner traders on Forex market loose their deposits for this reason. There is a rule on Forex market: trend is your friend. Don’t think that you are cleverer than the others. When there is a trend, you must trade with a crowd in order to make profit.
The third mistake is too much trust to various indicators, automatically trading systems, popular analysts and guru of the financial markets. Remember that the decision about trading must be only yours. It is your money that you invest and trade with and if you loose due to the recommendations of a guru, indicators or other assistants mentioned above, none of them will take responsibility for your losses. Furthermore, making the trading decisions based on your own analysis, you are gaining a valuable experience that will be very helpful and useful in the future.
And finally, the fourth error in Forex trading is the lack of an organized trading plan and your own trading strategy. At any time, disregarding on the market’s behavior you should know what to do at the moment. In order to make your trading organized and less risky we recommend (especially to the beginners) keep a diary where the following points of Forex trading must be noted.
- Date and time of creation of a trading plan
- Name of a tool that is used for making a trading plan
- Reason for choosing the tool
- The moment of entry to the market (buy, sell) and the comment why it was chosen.
- Stop-loss orders
- Exit point with the maximum profit. Take profit order.
- Comment after closing a trading position.
It is very important when choosing the moment of opening a trading position follow the ratio of at least 2:1 of profit to losses. But in general the more profitable positions you have, the better. Following all the rules mentioned above will help you earn in any financial markets including Forex.
Source: Forexarticlecollection.com
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