Common Mistakes in Forex Trading.
Being a forex day trader is one of the best jobs you can try. You don’t have to be a legit businessman to become excellent in doing this. All you need is the right set of skills and a knack for making timely investments. That said, traders do make mistakes from time to time, with some of them being more critical than others. Here are some common mistakes in forex trading. The ultimate goal of this article is to help you not make the same mistakes.
1. Holding on to losing positions for too long- A number of traders end up losing money because they don’t know when they should cut their losses. Common Mistakes in Forex Trading Some hold on to losing investments for too long, with the hope that these stocks will turn around. A trader must learn when to bail out from bad trades.
2. Not listening to news announcements- One of the most important skills any trader must have is to be updated with changes in the stock market. As such, a trader must stay updated with news announcements. Making trades before seeing news is very risky, with the result often being losses that otherwise could have been prevented.
3. Being too aggressive- While being aggressive is an asset for a trader, being too aggressive can lead to failure. For example, jumping the gun as soon as you see an announcement or trend can be extremely risky as market conditions can change in a hurry. It’s important for traders to stay under control when making trades.
4. Committing too much money- Common Mistakes in Forex Trading that One mistake most traders make is committing too much of your capital on a single trade. While this approach can bring a lot of reward if the gamble is right, failing to nail the trade can be exceptionally costly. As a rule of thumb, the biggest amount you can invest on a single trade is 1% of your capital.
5. Having unrealistic expectations- As a trader, you have your own list of expectations. Whatever these are, it is important that such expectations are tied with realism. Expecting too much and setting standards too high can lead to both losses and frustration. As a forex trader, it’s important that you keep expectations at a realistic level.
Written and provided by Mr. Ahmad, an analyst from MTrading.eg – an Egyptian Forex broker.