5 mistakes to avoid in Forex trading

Published on: 01/19/18 11:45 AM

5 mistakes to avoid in Forex trading

There are several mistakes that you are going to want to avoid when you are Forex trading.

Pre-positioning

The first mistake for the new fx brokers to avoid is pre-positioning for news. This means that you are going to need to make your decisions after a news report. The news reports can move the financial market but you are not going to know which direction that it is going to go in. As an investor, you are going to need to be confident in the decision that you have made because it is going to make or break you.

When to trade

The second mistake is trading right after the news reports comes out. Most of the time, as soon as the news report is announced, then the market is going to become very aggressive. This can cause a person to lose a lot of money because of the lack of liquidity that is going to be involved in the trade. You stand to lose a lot more money than you think you are going to. When you are one of the best forex traders, then you are going to know that you are going to need to be patient.

Capital

The third mistake is risking more than one percent of your capital. Just because you are investing more money, it does not mean that you are going to get more profits. Most of the time, when you risk a lot of money on a single trade, you are going to end up losing a lot of money. It is a common rule that a person should not invest more than one percent of your capital in one trade. This is especially true if you consider yourself a professional trader because they know all of the risks that are involved.

Down Averaging

The fourth mistake is averaging down on your trades. Most of the time, this is going to happen when you first start trading but at some point all traders are going to do it. The main reason that this is so risky is because it is also going to be using a lot of time. It is better to use the time and money to do something that is going to allow you to be in a better position in the market. Think of it has if you lost 50 percent of your money, it will need a 100 percent return.

 

The fifth mistake is having expectations that are very unrealistic. Most of the time, a person is going to think that the trade is going to act according to the trade direction and your wishes, but this is not always going to happen. This is because the market is never going to care what you want and it is probably going to end up being choppy. This means that it is going to trend based on a variety of different cycles that could be short, medium, or long so it can cause some errors in judgement.