5 Mistakes New Forex Traders Almost Always Make
Although without a doubt the Forex market is the most widely traded market in the world. Yet, forex trading is also the market consumers seem to understand – the least. Is there any wonder so many new traders make major blunders within their first few months of trading?
Want to know what the types of mistakes new traders make? Continue reading…
photo/ Gerd Altmann
- No Clear Strategy
Similar to other forms of trading – the forex market requires traders to possess a clear and well-defined strategy. Why? Because as a forex trader, you want to be prepared for anything to happen at any time. Doing so ensures you have an exit plan should things go south. Likewise, it also helps to have mapped out a plan for positive returns.
- Impatience
New traders have a tendency to look before they leap, which is just another way of saying that they often lack patience. The problem with impatience where forex is concerned is that it’s so easy to get caught up in the moment by chasing fads and other fleeting moments. On the other hands, clarity of mind is an asset to anyone in this business.
- Financial Mismanagement
Many new traders get so enamored in the ‘glitz and glam’ of forex that they forget to use common sense when it comes to managing their finances. For example, a trader who has a good week or a stellar month is apt to forget that not all months are good. Indeed, anyone seriously considering making fx trade should also put money aside for their losses too.
- Carrying Losses
Another disastrous step lots of folks take, is to carry on with trades where losses where losses becoming persistent, not wanting to accept that they got a wrong game plan for it in the beginning. Usually, the path of trading is never made of complete success; you’ll find times that you are making losses, successive ones.
The best thing is not to give up the trade, but rather to try and minimize the losses. If you happen to buy a commodity and have its value decrease almost immediately after you’ve bought it, you need to be wise. If it makes the first loss, which might be small, you can let it slide. But if keeps on, you should, using the stop loss orders you’ve set, try cutting it.
Never let the losses continue succeeding themselves hoping that there will come a time when things turn the other way round, to your favor
- Trading Undercapitalized
As you go out to trade, you need to be financially prepared. You need to understand what you want to get yourself into and see if you have the financial resources that are required to go through it. Most often than not, traders go beyond what they can endure. You’ll see one getting into a trade costing him all the money he has and probably requiring of him to get more. This, you need to understand, is huge risk as it could get you out of business overnight should the trade go against you.
Ideally, what you ought to do is not to look for a trade and then look for money to do it, the best approach is to look at the little or much money you’ve got and look for a forex trading that can work within those limits.
Author: Nataliya Stefanus
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