This Article is About
novice traders
currency markets
new traders
forex traders
money trading
forex broker
moolah
forex markets
trading forex
no doubt
livelihood
leverage
Five Most Common Forex Trading Mistakes
Join 1000's of Authors at StreetArticles Today!

Five Most Common Forex Trading Mistakes

More than 80% of forex traders tend to lose all their money trading forex online. The primary reasoning behind this is due to a lot of factors that most traders, especially beginners tend to make which could vary from choosing the wrong trade to repeating the same mistakes over and over again. One of the most common reasons why traders tend to fail is because most trade based on their gut feel rather than trading based on analysis and backed up by facts.

In this article, we highlight five of the most commonly made mistakes in forex trading. By understanding these points, traders can avoid these mistakes which are easy to make but can prove to be a costly affair. The key points mentioned ensures that you do not belong to the 80% of the traders who end up losing all their capital and call it quits. Forex trading is risky no doubt and its hard to make money, however the forex markets does give the opportunity for traders to identify potential windows of opportunity in order to rake in the moolah! It is no wonder why that there are still successful forex traders out there who have devoted themselves to understanding how the financial and currency markets work and thus build their livelihood on trading forex full time.

The points mentioned in this article are just one of the many mistakes new traders tend to make and it would take quite a lot of writing if we were to point out all the mistakes that are usually made by novice traders. However, by understanding the important mistakes pointed out in this article, it can help traders to greatly reduce their losses and set themselves up for profits and for the long term.

But before we go any further, there are some key points that every trader should bear in mind. The first is in choosing the right margin and leverage to trade and secondly having the right forex broker to trade with. Leverage in forex is often overlooked but plays an integral part to determining your success as a trader.

Making Unplanned Trades

For most retail or individual trades, trading forex is as easy as launching their trading platform and randomly choosing to trade a forex currency pair. Even worse, what continues further on is to do a quick analysis of the charts and place a buy or a sell order purely based on gut feel.

Contrary to the above, traders need to spend time in choosing the right markets, be it forex or metals. Devoting a substantial amount of time to study the chosen market will help traders to understand the trends and also identify the key support and resistance levels.

Choosing the appropriate stop loss levels and most importantly when to take your profits forms one of the most essential factors and exhibits discipline for the forex trader.

Opening the losses and taking profits too quickly

For most traders, given the fact that it is quite difficult to make profits, the traders often tend to focus on the profit factor. This results in most trades being closed prematurely; that is when the trader notices a few pips in profits and at the same time letting losing trades continue in hopes that it would come back to profit.

Novice traders tend to get overly excited at the prospects of making a few pips in profit that quite often it results in logic taking a backseat. Losses are an integral part in forex and even the most successful forex trader would have taken losses at some point in time.

When there are trades that just don't seem to show any signs of retracing their losses, your best option is to close that trade and take up your losses rather than let the trade do more damage than what has already been done.

Making up for lost profits

Another classic example with novice traders is that once they take a loss, the immediate focus is to regain their lost trades. This often results in opening irrelevant trades with hopes of making a profit. However, forex doesn't quite work that way and at times irrespective of whether you open a buy or a sell order, losses will come your way.

By planning your trades and executing it carefuly and in the event the trade results in a loss, the best way out is to take some time out and regroup your strategy.

Over trading

Over trading is one of the most common reasons why traders tend to lose money quickly. This involves opening too many positions in different markets and thus losing focus on the goal at hand. Having a proper discipline is the key. Most seasoned professional tend to trade not more than 10 or 20 trades during the month.

This is partly due to the logic and the actions that are backed up by analysis. By spending good enough time researching the markets, you don't need to make 100 trades in order to see significant profits, but rather a moderate number of trades that are well researched can help you gain your profit goals.


Street Talk

No comments present
You May Also Like
How To Make Incredible Profits In Forex Trading
Forex refers to foreign exchange in which traders make investment on the currencies. The currency market is responsible for Forex trading. In the beginning, foreign exchange trading was only suitable for the large-scale organizations, government and multinational companies but now with the rise in the technology, this platform is open…
By: James Franklen in  Finance  >  Currency Trading   Apr 22, 2013  
0
  Likes: 0

Technical Analysis System In Forex Trading
The effectiveness of technical analysis in forex trading cannot be denied and there are many professional traders who are of the belief that the technical analysis system in Forex trading is highly beneficial as compared to the futures trading. It is because of the reason that the currency trading market…
By: James Franklen in  Finance  >  Currency Trading   Apr 27, 2013  
0
  Likes: 0

Choosing the Best Forex Expert Advisers
Online forex trading was the actual dream for many people who experienced the limited cash blood flow. But the actual emerging marketplace has possible for anyone to begin online trading utilizing a small cost. The Foreign currency markets could be the treasure pot for individuals who know where to consider…
By:  in  Investing  >  Day Trading   Dec 16, 2011  
0
  Likes: 0

Using Unconventional Means to Financial Markets Investing
Investors often make use of a simple strategy that is known as entering the markets. With this strategy, traders make money by just any random entry trades into the markets. The concept with a random entry is that traders give up on the advantage that your trade has. The way…
By:  in  Investing  >  Day Trading   Mar 24, 2012  
0
  Likes: 1

Why Investing In A Forex Signal Service Just Makes Good Cents
Deciding to make the jump into the foreign currency market can be intimidating. Oftentimes, new investors are unsure of of how, or even where to get started, how much they should invest, what a worthwhile investment looks like, or even how much time they need to dedicate to Forex trading.…
By: Mike Wallace in  Finance  >  Currency Trading   Jun 03, 2016  
0
  Likes: 0

How Forex Traders Achieve Success In Trading?
Forex is a top destination for traders looking to invest and earn lots of money. There are numerous options of traders to invest and gain more profits. But, forex is a complex system and needs proper optimization to gain profits in trading. Traders need to create strategies and take services…
By: catherinewalsh in  Finance  >  Currency Trading   Mar 21, 2016  
0
  Likes: 1

Top Things Required to Be A Successful Forex Trader
Forex market has become a top destination for traders to earn money. Seasoned to aspirant traders compete in the platform with an aim of earning money. But, it is never easy for traders to earn money without following certain disciplines essential in the platform. Traders need to acquire skills in…
By: catherinewalsh in  Finance  >  Currency Trading   Mar 14, 2016  
0
  Likes: 0

’s January 2016 KPI Report: 3 Takeaways We Should All Be Taking Notice Off
If we could summarize the report in one statement we can confidently say that Bitgold is on a roll these past few months resulting into an astounding growth. The report compressed into an infographic (Bitgold definitely knows the power of visuals) showcases the mileage and growth of the company. Though…
By: Bitgold in  Finance  >  Currency Trading   Feb 22, 2016  
0
  Likes: 0

Top Things Required to Succeed In Online Forex Trading
Forex has become the most important platform for trading looking to trade and achieve lots of profit. The platform is offering numerous opportunities to the lay people to trade and gain profit. It is the biggest platform where trillions of dollars of trades occur between traders from different regions of…
By: catherinewalsh in  Finance  >  Currency Trading   Nov 30, 2015  
0
  Likes: 0

Forex Automatic Trading - What Every Successful Forex Robot Trader User Knows... And You Don't!
Have you ever bought a Forex robot trader and run it on Metatrader, only to find that it hemorrhaged money after a couple of weeks? Before you cry scam and return the FX trading system for a full refund, I want to let you in on a little secret that…
By: Thad B. in  Finance  >  Currency Trading   Feb 25, 2011  
0
  Likes: 1

Importance Of Expert Advisors And Metatrader for Forex Trading
Trading in forex requires successfully requires special knowledge and expertise. It is a complex system that needs to be maintained carefully to avoid problems in trading. It is the largest platform for online traders to invest and earn lots of money within a short time. To earn money, it is…
By: catherinewalsh in  Finance  >  Currency Trading   Jan 21, 2016  
0
  Likes: 0

Of Terror Attacks, Natural Catastrophe And Paperless Money: Why Digitally Liquidating Your Assets Is The Way To Go In Times Of Need
With the onset of the Paris attacks last November 13 (coincidentally it was Friday the 13th) it was a horrible time as an act of terrorism caused more than a hundred lives lost. It was truly a sad and heartbreaking news but it also showed that humanity is with one…
By: Bitgold in  Finance  >  Currency Trading   Nov 18, 2015  
0
  Likes: 0

2016: Year Of The Golden Cryptocurreny And What Lies The Year Ahead
This is a fearless prediction that needs no further evidence. With the resurgence of digital forms of payment and assets even making credit cards obsolete we are at age where apps are slowing taking over. Not only that we are now slowly going back to gold as the main medium…
By: Bitgold in  Finance  >  Currency Trading   Jan 21, 2016  
0
  Likes: 0

Super Tricks to Succeed In Online Forex Trading
People willing to earn lots of money within a short time are trading in numerous platforms online. But, the most popular platform for traders is the Forex which offers huge opportunities. People willing to succeed in life earning lots of money shouldn’t ignore know this platform. This is the largest…
By: catherinewalsh in  Finance  >  Currency Trading   Oct 19, 2015  
0
  Likes: 0

S&p 500 VS Gold VS Hermes Birkin: Which Investment is Really Better?
A trending topic that just went viral a few days ago is that the Hermes Birkin is much more valuable and safe to invest than gold or the stock market. Which caused a flurry of shares and retweets among social media accounts. But removing the side of variety though, in…
By: Bitgold in  Finance  >  Currency Trading   Jan 21, 2016  
0
  Likes: 0

Article Views: 1806    Report this Article