Forex trading can be very profitable if you understand the basics of trading. You need to understand the basics and internalize them for your use every time you trade forex. If you want to be a successful trader, you should avoid forex trading mistakes that most unsuccessful traders make.
What are the top mistakes to avoid?
Here are some of the top mistakes that you should avoid:
As far as possible, you need to avoid being too emotional when trading forex. Irrationality is caused by being emotional. This usually happens when traders lose money in a single trade and start opening multiple positions to attempt to compensate for their losses. Such trades are usually bound to fail because they have no educational backing and are based on emotions.
Trading without a plan
Another popular mistake that traders make is to trade without a proper plan. Strategy is a key component that defines gains and losses in forex trading. A trader without a plan will be inconsistent and prone to irrational decisions that may make him/her lose money in trading.
Trading in numerous markets
As a trader, you need to have expertise in a set of markets. You cannot trade in all the markets open for trading. If you open trade in all the markets, you might end up losing money in some markets because you do not understand them. At the end of the day, the losses that you’ve made would neutralize the profits earned. Therefore, it is important to specialize in a single market and show prowess in it. This will give you time to study the market and make the right decisions.
Ignoring Expert Advisors
Another mistake that is so costly is ignoring the Expert Advisors offered by your trading platform. If you download MetaTrader 4 (MT4), you will get guidance on how to trade. This platform has bots that help in reducing your trading risks and make the right decisions. Some traders ignore such good pieces of advice and end up losing the money that they had in their accounts. Therefore, you shouldn’t ignore the trading guidelines and tips offered by MT4 for they are insightful
Trying to anticipate news
It is a fact that current news events influence forex significantly. However, this does not mean that traders should anticipate news before they are announced. The value of the paired currency will only change if the news event is announced and influences the financial market. If you anticipate the direction that the pair will tale before the actual news release, you might lose your money if you find that you were wrong.
Trading without a stop loss
You should have the Stop Loss feature turned on to protect you from losing a lot of money. This unique feature is found on the MT4 trading platform. It works to set a limit to the amount of money that you can lose in a single trade.
You can be a successful forex trader if you avoid these common mistakes.