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Forex Trading Mistakes to Watch For


Contributed by Sussex SEO
November 14, 2018



Whether you're a seasoned Forex trader or you've just started and still trying to find your way around the complex concepts, there are common mistakes that everyone does. These mistakes end up costing you a lot of money and can even discourage you from continuing after you've lost your investments. They're easily overlooked aspects of trading because every trader, regardless of their skillset and experience, takes them for granted. If you're one of the people who believe that the best lessons are those learned from other people's mistakes rather than your own, then avoiding these mistakes losing traders make is the difference between being a winner or a loser.

Cashing Out Too Soon

You've been keeping a close eye on these trades for so long. You did your homework and using your unique combination of analytical research and intuition you bought them at the right time. Now they start to climb high and you're watching with glee and nervousness. You're worried they'd peak any time soon so cash out. Big mistake. The stocks keep rising and go on to set new records. On the same token, you might have the exact opposite problem. You have a losing position that you hold on to for far too long. Instead of cutting them loose and moving on, you adamantly refuse to admit that all the time, money, and hard work you invested there were for nothing. Accepting loss is part of trading that you need to adhere to.

Not Using Stop Loss

If you're not using a stop loss or don't even know what that is, you should stop your trading immediately and learn about it. Stop loss orders are what prevent small losses from becoming a huge crisis that will kick you out of the market altogether. People who don't use these important orders rely on a false belief that they will be proven right on the long run even as their trades are losing.

Overtrading

Whether you trade a lot every day or you trade too many positions at the same time, you're making a huge mistake. Not only will this mistake expose you to the risks of the market, but you can find many of your investments going down together which can have a significant impact on your trading capabilities let alone your decision-making abilities. You should focus instead on trading in those positions that you have researched thoroughly and believe you have an edge in. Also, narrow down the number of positions you get involved in to give yourself a healthy margin collateral.

Not Following News, Trends and Events

Trading in isolation is a recipe for disaster. The markets change continuously. And big events in unrelated fields such as politics or even the weather (a hurricane in Asia could impact the number and volume of traders and trade from that region) will affect the stocks. So keeping abreast of what's going on around you and inside the market will help you get the big picture. A government report could also have a huge impact on the market. So make sure you follow the news and base your decisions on actual facts not gut feelings.

Fear Trading

Fear of losing can sometimes hold you back. But trading is about accepting losing and moving on. If you let fear of losing interfere with your decision making then you're doing this all wrong. You have to be fearless without being reckless, take risks without going overboard, and know when to pull back and wait for your moment. Think about all the profits you lost because you let fear prevent you from making the right decision at the right time. This doesn't mean that you should jump in every time you see an opportunity. The opposite of fear is recklessness and neither of those states of mind is synonymous with winning. What you need is to strike a balance and not let your emotions cloud your judgment.

To be a winner at Forex trading you need to learn from other traders' mistakes. You don't need to do the same mistakes over and over hoping to get better. Part of your trading education is to see what others have done wrong and avoid these debacles.

 

Tags: forex

 

 

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