10 Forex Trading Mistakes Both Veteran and Beginner Traders Make
The world of trading is vast, fast-paced, and complex. Nonetheless, a lot of people and businesses trade, and most of them trade Forex. Being in the biggest financial market in the world, it’s not surprising how Forex trading is sought after by traders. Accessibility, flexibility, liquidity, volatility, and profitability make it a cut above the rest!
Indeed, you can experience the great advantages that Forex trading offers. It can be rewarding, and successful Forex traders can attest to that. Trading Forex can be for anybody, even for you, however, you should not ignore the fact that it can be challenging too. Just like in anything, you start as a beginner trader before you become an expert, and it takes loads of time and effort to get there.
Although Forex trading is the best market for traders, it doesn’t exempt them from experiencing failures. One of the major reasons why traders face some defeats is their own faults. A trader’s own decisions and actions can cause him to lose in Forex, so you should be careful if you want to win.
Explore further about this important Forex matter. Below are 10 Forex trading mistakes that both veteran and beginner traders make. Yes, even long-time traders may commit errors, so while you’re a newbie as you read this, you really should know how Forex trading works!
1 – Not Doing Research
Before you enter Forex trading, know what it is. Learn about it as a whole. That’s what a lot of newbie traders fail to do. Many fail because of a lack of understanding of Forex, and that’s a grave result of not doing research.
Being a chief entryway to comprehension, research is a must. It cannot be set aside. Forsaking research is the quick passage to failing and losing money in Forex. Many novice traders are attracted by the promising fruits of Forex trading, but they forgo doing their research. As a consequence, they get a taste of one of the common Forex trading mistakes by beginners.
Without research, you won’t be able to grasp and master Forex, from the basics to ace-level must-have skills and must-know strategies. You won’t fathom the do’s and don’ts, the twists and turns of Forex trading. In short, you should never trade Forex if you never do research.
2 – Having No Trading Plan
Speculation is what you do as a Forex trader, but that doesn’t equate to wild guessing or predicting. Some people think that it’s about luck, so they misconceive trading as a form of gambling when actually, it’s not. This is one of the reasons why some traders trade without a plan, thus committing a huge Forex trading mistake.
You will fail in Forex when you have no trading plan. You don’t have a practical guide, a set of trading techniques, risk reduction measures, and other financial management tactics. It’s a sure ticket to Forex losses.
Trading is speculating price movements through thorough planning before thorough analysis. Without a trading plan, you’re just gambling.
3 – Lacking Attention to Economic News
Forex is universal, so it consists of numerous currencies all across the world, being exchanged one to another by traders. Each currency is unique, then there are currency pairs that you must also familiarize yourself with. That being said, lacking attention to economic news is one of the determinative Forex trading mistakes that will let you down.
As the largest market, the Forex market has massive quantities of active exchanges daily. Due to its impressive liquidity, dealings happen quickly. Furthermore, a lot of factors regarding national economies can affect price movements. If you don’t stand by current news, you won’t be updated on the latest events that have an impact on your Forex trades. Consequently, you won’t know what to do and not do.
4 – Trading Beyond Capability
You make a trading plan to know what your trading capacity is, so trade according to it.
Unfortunately, some traders get out of control and are so reckless that they trade beyond their capability. Their desire to keep trading and to trade riskily gets ahead of them. Discipline is forgotten. Hasty, thoughtless trades are made. From there, Forex traders fail.
5 – Letting Losses Defy and Discourage them
Because right speculation is the key, losses are inevitable in Forex trading. Really, some traders lose at the same time some win.
It’s great when you’re on the winning end but devastating when it’s the opposite. Letting those trade losses defy and discourage you relentlessly is wrong. Sure, you can feel dispirited because that’s a given, and nobody can blame a dismayed trader who fails a trade. Financial losses never feel good. They make you sad and even mad, but you should accept them and make the most of what you can do better.
If you just keep holding onto those trade losses, you won’t be able to move on, and you’ll lose bigger opportunities ahead of you.
6 – Working with the Wrong Forex Broker
For traders to gain access to mediums where they can exchange foreign currencies, Forex brokers play an important role. They provide a huge help to Forex traders, especially to newbies. Yet it’s regrettable when you choose and work with the wrong Forex broker. You may get into financial issues, trading scams, or total bankruptcy, and that’s just miserable!
This may happen only if you don’t wisely and meticulously choose a Forex broker. The job description is unclear to you. You don’t check credibility. You don’t do test trading. Cheap rates are always your top priority. You trust so easily. All these can lead you to harm. This is again why research is a critical must-do of Forex traders.
7 – Trading without a Stop Loss
Stop losses minimize big and unrestrained losses in volatile trades. Traders who inflict catastrophe on their own finances trade without a stop loss.
8 – Taking Multiple Trades that are Dependent on Each Other
If you do multiple trades at the same time, they should be journeying in their own separate ways. Otherwise, you’re making one of the actually avoidable Forex trading mistakes.
When you take multiple trades that are dependent on each other, it’s an enormous risk you’re taking. Since they’re connected with each other, it’s certain that you will win or lose, nothing in between. Winning means your profit is multiplied by the number of your trades. In contrast, losing one means losing all because all your trades are in correlation.
9 – Holding On to Losing Positions
Carrying a positive mindset is essential in Forex trading, but being realistic is a powerful weapon. Some traders are just positive but not realistic. One proof is holding on to losing positions.
When you add investment to a losing trade because of the confidence that the tables will turn, you’re wasting the time and money that you should just be using for more feasibly gainful trades. And you’ll realize that even more when your speculation is incorrect or when the price movement of losing positions is going against you longer than you think.
10 – Having Poor Risk Management
Trading setbacks exist, and as mentioned throughout the whole piece, they can be caused by your mistake as a trader. What will help you handle Forex problems when you’re already confronted by them is your risk management skills. But before anything else, of course, they can help you prevent dangerous trading patterns and attitudes.
If your mind is just on profits, you might forget that there are obstacles along the way, and you might fail to prepare. Having poor risk management in the Forex trading mistake simply makes bad worse.
LEARN FROM THEM.
The unsurpassed uniqueness and prowess of Forex make it the most appealing among all kinds of trading. From convenience to opportunities, Forex trading is definitely preferred by more and more people, both individuals and organizations.
Truly, it remains superior in the field of commerce, yet Forex traders aren’t excluded from the possibility of committing forex trading mistakes that result in failures. Especially if you’re a beginner trader, you may screw up a few times, but it’s often understandable because you’re a newbie. Nevertheless, it’s best to learn how to avoid Forex trading mistakes, so you can prepare, trade well, and lessen their chances.
What’s more, not only new traders experience trading fails because even veterans sometimes make mistakes. That goes to show how defeats in Forex trading should not dishearten you to trade again because these instances are normal, you can try again, and you know, you’re only human.
If you’re a newbie Forex trader, always be willing to learn and to be taught. Possess an optimistic yet realistic mindset. Meanwhile, when you experience Forex losses because of your own errors, don’t be totally disappointed. Don’t remain down; rather, get up, and look forward to better trading opportunities.
Acknowledge your mistakes to know what and where to troubleshoot. Seek improvement. Make better trading plans. Formulate stronger risk management. Always, the most important thing is that you learn from these mistakes, regardless of whether you’re a veteran or a beginner trader.
ABOUT THE AUTHOR:
Nicole Ann Pore is the writer of this article.