The Most Common Mistakes When Trading Forex

Forex

Trading seems to be simple. After all, the price can only go up or down and what you have to do is choose the right direction, sit and wait and the money will come, right? No, it is definitely known that it is not.

The world of trading can be full of surprises for those who have great ideas, but lack preparation. We have put together some of the most common things that are often overlooked when starting to trade Forex.

Trading without a plan

Do you have a trading plan? If not, it’s time to get one and a good way to start is to sit down and ask yourself, why are you trading? Do you trade to earn extra money? Do you want to make trading a career in your life? Are you doing it to fulfill a challenge nothing more? Whatever the reason, your goals will dictate the direction of your trading.

What can you do?

Think about what you really want to achieve from trading, then work out how you are going to achieve it. Consider the amount of time you are able to spend trading, the type of trades you want to take (e.g. high volume trades, low profit trades) and whether your level of knowledge is sufficient or you need to spend time on trading. Learn more.

Trading too much too soon

Because of the potential to make money in FX market, the temptation (especially for new traders) is to abuse limits in the hope of making bigger profits. But, trading too enthusiastically – whether in volume or value – only serves to increase your level of risk. If you go overboard and things go against you, you could go out of business without even having a chance to set up shop. Many people enter trading with the idea of ​​becoming a millionaire quickly. But the reality is that the world of Forex is not a place where you throw a little money and get instant wealth, it takes time and skill to achieve great things in this market.

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What can you do?

Start slowly and at your own pace. Practice on a Demo Account first, then you can move on to real money trading, try to start by investing small amounts of money in one or two pairs and see how you feel and what you notice in the process. According to the review on the Equiti broker, we can say that money can be made in Forex, but it rarely comes from a small number of very fast trades. The more time you spend trading, the easier it will be for you and the ability to spot opportunities that come your way.

Apply Emotional Trading

We’ve all had that euphoric feeling when everything is going right and we think nothing could go wrong. Whether in the field of sports, sales, cooking, etc. You tend to feel invincible and everything flows perfectly. When these kinds of things happen in trading it is usually due to a sequence of positive trades that can make you believe that you are already a trading master. It is crucial to note that every hot streak comes to an end and in trading, this is especially important because your money is at stake. Don’t take this the wrong way, it doesn’t mean you can’t feel confident if you’re achieving well, just don’t let all that excitement lead you to make the wrong decisions.

What can you do?

Try to identify your emotions so you can control them. Before placing a trade take an objective look at what you are doing. Does what you do match your strategy? Is it based on information or just on a “good feeling”? How will you react if the trade goes against you? Try to consolidate a system of signals to avoid being consumed by emotion.

Guess

If you enter the world of Forex without any preparation, you are not really a Trader. In fact, trading without knowing the basics or without interest in how the market works is a bit like going to a casino to put money on roulette and hoping for the best. While it is true that there is uncertainty and volatility in trading, you can mitigate these factors by spending time and study on it, only then will you be able to get an idea of ​​what are the best opportunities that suit you.

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What can you do?

Start with Forex education. There is plenty of information available online in the format you prefer; videos, blogs, books, and more. Then take what you’ve learned and apply it to a Demo Account, where you can practice without the risk of losing money.

Forget your safe zone

Even with the best strategy or plan in the world, it is always worth having a safe zone and that is achieved with tools such as Stop Loss. This is a function of the platform that consists of automatically closing a trade if it touches a certain price level. Yes, when a Stop Loss is executed you will have a loss, but this will be much less than the loss you would have suffered if you opened a position and stopped watching the screen for a while without Stop Loss. No trader wants to be in a situation where their Stop Loss level is executed, but you can be sure that the trader will be thankful that he has avoided further losses.

What can you do?

It’s simple: use tools, they already exist on the platform so there is no excuse not to use them.

If you take these tips into account before starting your trading journey, you will be able to avoid some of the most common mistakes that arise when starting in this world. In addition, you will be much more prepared to find success in the market.

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