There is no denying the fact the Forex is an open and over-the-counter platform. It makes the market greatly flexible regarding the trading process and times at which you can trade. Starting capital requirements are highly attractive. The massive leverage provided by most broker’s means that anyone can get started with a nominal amount of money.
However, the experience often becomes more painstaking than is at first assumed. We have all been there and mostly seen it all in our past. New market participants make the same mistakes over and over. Only when you can avoid all the common mistakes from your process, your trading strategy will significantly improve your chances of success.
1. Ignoring Prior Education
The most typical trading mistake made by all types of traders is to enter the market and put real money in the market without even knowing what they are dealing with. Experience or education is a mandatory prerequisite of entering the Forex trading market. New market participants love to think that they are special and somehow, they will be able to manage to earn easy profit from day one of their trading journeys. All these fancies are transient and fade the moment they face the harsh reality of the market.
The currency business is like all other businesses in the world. One has to know a lot about the business and grow the necessary skills to handle all the critical procedures and steps to finally reach the ultimate goal. However, skills are hard to develop as they need to be tried out and practiced several times before being incorporated fully into a person’s routine.
Newcomers often mistake luck for expertise. Everyone has a 50:50 chance of winning a trade, no matter what their skill level is. Winning a few trades is not a suitable measure of your trading skill. Skills should be learned and tested before being applied. Until then, engaging in the currency business is just suicide. No one should try to run before they can walk.
2. Not Devising a Plan
Because most investors are struggling to extract the most out of the available opportunities in the market, they often forget to create and follow an effective trading plan. They often overlook the necessity of having a plan. Look here and see how the professionals are doing their technical analysis. You will find the technical post at Saxo extremely organized. Analysing the market in an organized is possible when you have a strategic plan.
This is what makes a professional trader in the United Kingdom stand out from a new participant. Professionals approach the market with plans in their heads. Those plans enable them to keep their head straight even in critical conditions. Other than that, an ideal plan means a set of tested and proven strategies which had been effective in the past and also has the chance to bring about the positive result in the future. Plans define what a trader should do when he faces a complicated time.
3. Trading Without Incorporating Risk Management
Most beginners don’t even know how to shield themselves from potential risk as they don’t bother educating themselves about all the necessary factors to trade in foreign currencies.
There are concepts like stop-loss, limit profit, and many others that give traders opportunity to manage the risk they set. Trading without implementing a proper risk management system will not only evoke disaster but will also reduce the net profit traders make.
You will be more vulnerable than usual if you overlook the necessity of incorporating a pertaining risk management system. While trading, try to set the stop loss in a rational way so that you don’t have to lose big amount of money. Instantly exit a trade after reaching the target, following an ideal and reasonable risk to reward percentage. Never act like a greedy trader as it will make things much worse for you.