Certain situations can impair one’s judgement, and forex traders both new and old are not immune to these mistakes. These common trading mistakes can make you lose profit when trading.
1.No Proper Planning
Set up your plan or strategy to achieve your profit goals. These trading plans will be a point of reference in making decisions and will be the backbone of your long term trading profit.
2.Not Sticking to the Plan
Sometimes results from other traders can tempt you or change your mind on something. Always remember to stick to the plan you have laid out as it is designed to help you with achieving your long term goal.
3.Poor Risk Management
You are exposed to larger risks if you set your stop orders too far, but also risk closing your trades on very minor movement should you set it too close. Strike a balance between the two by monitoring your entire portfolio and your trades.
4.Not Learning from Experience
Experience in currency trading business is important in forex as this is where you learn and build your knowledge. Conserve your capital until you are confident enough about your knowledge in trading.
5.No set targets
Set targets for both short and long term. Set your profit target for your trading, set exit points in your individual trades so you can gauge your trading performance against your ambitions.
6.Interest Spread too thinly
Use your time efficiently by choosing to trade pairs that you understand well. Don’t be distracted from all the forex pairs you can choose from.
7.Too much Trading
Don’t be deceived to keep on trading just because your initial trades are going well. Not every trade will be successful so keep to your trading plan.
8.Too little Trading
Waiting for the perfect trade won’t gain you profit. When you come up with your trading plan and proper risk management, you should start trading to gain experience and start profiting.
9.Looking for the perfect system
Remember that there is no such thing as a perfect trading system. These are just tools to aid in your trades. Rely still on your own judgement.
10.Using systems that you don’t trust
Before picking a system, understand first the principle behind it and how it can benefit your style of trading.
11.Trading old news
Be vigilant with the news and trade before the forex can respond to it and adjust accordingly.
12.Confusing Strike rate with Profitability
Before anything, consider first the amount of profit you are gaining over winning or losing trades.
13.Not accounting for trading costs
You should always account in your plans the cost of the width of the spread as this is unavoidable in forex trading.
14.Lack of Patience
Patience is a virtue even with forex trading. There are right opportunities for you to start trading especially if it’s in your trading plan.
Trading is a rollercoaster of emotions. There will be losses and gains. How you handle these determine the performance of your long term goals.
Your trading plan is your best bet to keep you on track and help you make sound judgements especially when you are in doubt.