The foreign exchange market has loose barriers to entry which makes it one of the world’s most accessible day trading markets but this is also one of the reasons why a lot of traders make mistakes. Some novice traders fail to accept the fact that they are human beings and this makes them prone to making mistakes just as the greatest investors do. Here are common mistakes that one must avoid:
Sticking to one trading plan.
Expert traders get always start with a well-defined plan while newbie traders may be unlikely to have a trading plan in place before they even commence trading.
Underestimating your abilities.
If you think you can never succeed in the trading market, then don’t even bother to trade at all. Having doubts and low self-confidence about your ability to trade will lead to poor critical thinking in buying and selling from the market.
Trading Multiple Markets
Beginner traders may also jump from market to market. However, trading multiple markets can be a great distraction and may stave off the new trader from gaining the experience necessary to become a specialist and excel in one market.
Not using Stop-Loss Orders
You should have a stop-loss order for each trade that you have. Stop-loss order is an offsetting order that lets you out of a trade if the price moves against you by a specified amount.
Averaging Down or Up in Redeeming a Losing Position
Averaging down is adding to your position as the price moves against you and this is definitely a bad practice.
Risking more than you can afford to loose
It is recommended that you should only risk 1% or less of your capital on any single trade Having a coherent approach to forex trading will let you establish how much of your capital you can afford to lose.
Previsioning the news
Many currency pairs rise or fall rapidly at the onset of economic news releases. Instead of foreknowing the movement news will take the market, prepare for a strategy you can use after the news.