If something does not seem to work people usually analyze their mistakes and try to correct them. Forex trading is no exception. In this article we will talk about the most common mistakes that beginners usually make. Maybe you will see them in your trading behavior and be able to correct them in time. A common saying is that fools learn from their mistakes, and smart ones learn from the mistakes of others. We will teach you how to behave the smart way.
The first common mistake is the lack of a trading strategy. If you randomly open and close trades without any rules and understanding, it is not trading but rather gambling – a random chance to win or lose. Without a system you will not know how to profit from the market and what mistakes you are making. Trading strategy is an absolute necessity, without it you will not become a trader.
Next possible error that could happen is when you jump from one trading strategy to another. This changing from one to another is almost as having no strategy. Sometimes it happens that you come with a few losses in a row and then for you it seems that the trading strategy is not working. There is an overwhelming desire to quit this strategy and try something else. But, as experience shows, usually it is not the strategy, but the market conditions. If you have a trend line strategy, and a market consolidation occurs, it does not mean that the strategy is not working. This means that external conditions have changed. Therefore, it is important to thoroughly know your system, know how much is the acceptable losses in a row, in any market conditions. You can have multiple trading strategies in your arsenal for different market conditions. But, if you find a strategy that works, do not rush to throw it away if you see few losses in a row.
In order to avoid the situation described above, it is necessary to test the trading strategy. There are different ways to do this, but it is best to test it on a demo account. You can try the strategy on a demo account for a few weeks, and make sure that it works. If it does, you can safely move to a Real account. In such way, you protect yourself from unnecessary risks and would be able to thoroughly examine your strategy.
There are too many beginners that neglect the money management rules. The main reason for such situation is the complexity of the subject. Beginners have difficulties to figure out how to calculate the amount of the transaction, the amount of stop-loss, whether to partially close the deal, move the stop loss to breakeven, etc. But, once you overcome this issue, your trade will move to a whole new level.
It is very important not to miss any deal. If for some reason you can not follow the chart, then this time interval does not suit you, go for a longer time. Then it will be possible to check the graphics less frequently. Always place a stop loss order not to expose your deposit at risk. In such way, you can turn off your computer not worry because your position will be protected. It is not necessary to move the stop-loss if the price goes against you, then you should admit you did a mistake and it is better to quickly close the deal. Also, do not prematurely close any trades. If you have set a take profit, wait until the price reaches it.
Well, the most important point here is perhaps your mental attitude. Firstly, you can not let emotions take the upper hand in the trade. If you are unable to control your emotions then it is better not to trade. Secondly, you must believe that you will succeed. How can you succeed, if you do not believe in yourself?