TOP 7 MISTAKES IN FOREX TRADING
NO TRADING PLANS:
A trading plan is a strict set of rules, half of which a trader draws from their trading strategy and the other one from their money management strategy. The plan may be then complemented by as many more points as the trader sees fit.
WHAT IS TRADING PLAN:
Specific market conditions for entering a trade;
The amount of money to risk in a trade;
Specific market conditions to get out if you are wrong (stop-loss);
Specific market conditions to get out if you are right (take-profit);
Approximate time for the market to reach your target;
Note down and record everything!
Write this list down as postulates and have it front of you before, after, and during your trading.
RISKING TOO MUCH ON ONE TRADE:
Never take too much risk in one trade. Forex brokers are allowed a lot of freedom in terms of leveraging their trading account, while beginner Traders lag behind in money management discipline. A combination of these two leads to high risk, hazard trading. Always ask two questions:
What is the win/loss ratio that my strategy promises?
Does it comply with my risk/reward ratio per trade?
DECISIONS INTO EMOTIONS:
Emotions plays very important role in trading. John C. Maxwell once said, “A man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them.”
Having goals in trading can help you stay motivated and disciplined. Most traders do not make money in the markets over the long-run for one simple reason: they trade way too much. One curious fact of trading is that most traders do very well on demo accounts, but then when they start trading real money they do horribly. The reason for this is that in demo trading there is virtually no emotion involved since your real money is not on the line.
TAKING PROFITS TOO EARLY
As a part of wrong decision making and poor strategies, traders specially beginners close their positions too early. This is also a emotional factor which may not allow them to take right decision and book more profit.
NOT SO STRONG TRADING STRATEGIES
To help you achieve your goal, which is to become a consistently profitable trader, you need a strong trading strategies. Equidious Research built trading strategies for Best Forex Signals, profitable and accurate signal tips.
FREQUENTLY CHANGING YOUR TRADING PLANS
Trading financial markets, especially on short-term intervals, can be a very exciting activity. The markets move, the money flow is real, and it is live. An exhilarating experience indeed. It is almost as if the market wants to be traded. This delusion should not, however, dictate your trading. You have a plan to follow, remember?
Chasing money takes its toll. Looking to increase one's profits, a trader bends their strategy just ever so slightly, entering where they should be patient and exiting where they should be tranquil. Overanalysing comes hand in hand with overtrading.
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