Forex trading is such a lucrative business that in every single day we have new traders in the community. Many new people are now participating in forex trading as a part time profession and full-time profession. If you are involved in day job then you know how hard you work from 9 -5 in every single day. There are many people in today’s world who are struggling to meet their financial need in the market even after having a fancy education. If you look at the traders in today’s world then you will notice that most of them are not struggling pretty hard to make money in forex trading. Most of the retail traders in the financial market jumps into the online trading world without having a proper knowledge about the financial industry. So when they start trading with the real money in the forex market they encounter too many obstacles and end up by losing money. In this article, we will discuss how to avoid the most common mistakes in forex trading.
Overtrading: Overtrading is one of the most common mistakes that every new trader make in their life. If you are relatively new in forex trading then you will be trading very frequently in the market. Most of the novice traders spend a huge amount of time in front of their trading platform in the market to execute their trades in the market. If you are relatively new in forex market then you will think that the more you will trade the more money you will make. But as a professional trader, you must know that over trading is one of the most deadly enemies for the forex trader. Always have a strong trading plan and never execute more than three trades in the market. Instead of trading, every possible setup in the market tries to focus on high-quality trade execution in the market. If you have three consecutive losing orders than leaving the trading station and go out for a walk. There is no need to hurry to recover your losses since the forex market will give you golden trading opportunity very often.
Taking too much risk: If you truly want to become a professional trader in the forex market then you must trade with stick risk management factors. The number of an unsuccessful trader in the forex market is so high only due to the lack of risk management plan. Most of the novice trader in the financial market takes too much risk while trading the financial assets in the market in order to gain more profit. Sometimes the novice traders think that you will follow strict risk management plan but after few consecutive losses in the market, they start to take high volume trade in the market in order to recover their losses. The best way to minimize the risk in trading is by using low leverage in your trading account. If you trade with low leverage than once you won’t be able to trade with a high lot on your trading platform. Statistics suggest that those who are trading the financial industry with low leverage tends to do better in forex trading. Leverage is just like a double edge sword in the market. If you are relatively new in forex trading than its better to trade with low leverage account.
Ignoring the fundamental factors: Most of the novice traders in today’s world trade the financial instrument only by the help of technical analysis. But in order to a make, a decent profit in the forex market the three types of analysis is must require by the traders. It’s true that by using the technical analysis in the forex market you will be able to find the best trading spot in the market but inured to ride the trend in the market fundamental analysis I s highly required. In the eyes of trained professional three types of analysis is must if you really want to become profitable traders in the forex market. Fundamental analysis is often known as the price driving catalyst in the forex market. So without knowing the fundamental analysis, you will never be able to take high-quality trades form your trading platform. So before you take any trade in the market do the fundamental analysis and after that do your technical analysis. And try to make it a habit since it will greatly help you in your trading career.
In summary, There are many types of mistakes made by the novice traders in the forex market. If you are relatively new in forex trading then chances are very high that you will do the above mistakes in the early part of your trading career. Make sure you focus on high-quality trade execution in the market and always consider the fundamental factors. Never take any trades in the market with high risk in order to gain huge profit in a single trade.