7 mistakes to avoid in Forex trading

Many beginners consider trading in the forex market as an easy way to get rich in a short period of time. But very few consider the risks and the commitments which are required to truly achieve this goal. To realize long term gains you should execute transactions in relation to your own balance.

Lack of discipline
Traders should always know at what price they want to open and close their positions before they enter the market. The decision is ideally based on a concrete and gradually developed strategy. Disciplined traders, who work continuously with a balanced trading strategy, act usually more profitable than others.

Trading with large positions
One feature of the CFD and forex market, which attracts a lot of private investors, is the opportunity to trade on margin, in other words, to use leverage. The deposit of small initial capital will enable you to trade relatively large positions.

Waiving of stop-loss orders
Through the use of stop-loss orders, you can maximize your gains. Many beginners, however, hold on to losing positions far too long thinking or hoping that the market will turn around. They also tend to exit winning positions far too early to take a small profit, which eliminates the opportunity for greater profits.

No money management
The biggest difference between beginners and experienced traders is their approach to capital management. Professional traders recommend to risk a fixed percentage of your capital and to never vary this percentage.

Lack of market knowledge
A common mistake for beginners is to start trading without sufficient knowledge of the selected currency pairs and how currencies are influenced by global events. Learn as much as you can about how the international financial markets interact and how they correlate with each other, e.g stocks government bonds, commodities or forex. This knowledge allows you to make better-informed trading decisions when economic indicators are published.

Not monitoring positions
It is crucial that you always monitor each open positions in the forex market. To keep the performance of your traders in mind helps you to be in control and to follow market movements as they happen.

16 Jul 2019 3:58 pm Posted by admin