Forex Trading Education – The Most Common Mistakes Beginners Make That Lead to Losses
There are certain mistakes which the majority of novice traders make and continue to make and they end up losing their account equity. The mistakes are easy to avoid so let’s take a look at them.
The mistakes are in no particular order of importance there all important.
1. Trusting Automated Forex Software
The majority of traders buy cheap Forex robots or Expert Advisors and get wiped out it should be obvious to anyone, that you don’t get a track record better than the world’s top fund managers for the price of a night out. If these robots actually did work 95% of traders wouldn’t lose.
2. Over Leverage
Most brokerage houses will give you 200:1 leverage as standard and seen some that offer 800:1 and most traders think they should use it all and of course this leads to a wipe out. If you are a new trader 20:1 is plenty to use.
3. Trying To Predict Market tops and Bottoms
Prediction is simply hoping or guessing and that won’t help you in Forex trading. The far out investment crowd love the idea that markets move to some higher force but they don’t, if they did there would be no market at all, as we would all know the price in advance! If you want to win at Forex trading, simply trade the reality of price change and don’t guess.
4. Over Trading
Most traders think the more they trade the more they can potentially make but they end up taking low odds trades and lose. The good trades only come a round a few times a month so be patient! I know traders who trade a couple of times a month and make triple digit gains. They don’t work hard, they simply focus on trading the best set ups which offer the biggest profits.
5. Not being able to Trade with Discipline
Is the discipline to follow your system and keep losses. Sounds easy? It’s not.
The reason it’s not easy is because you have to trade through long periods of losses (it happens to all traders) while the market wrong foots you and takes your equity. Most traders get angry or frustrated, let their emotions come into play and start deviating from their system.
If you have good method, it’s actually useless unless you can trade it with discipline. Discipline comes from within and an understanding of your own personality and emotions.
The above mistakes combined wipe out the bulk of new Forex traders but with the right education and mindset there easy to avoid.