To be a better forex trader, or just to be a better person in general, you have to learn a lot of things. Learning a lot of things means you have to try out stuff you haven’t done before, which of course comes with the risk of making mistakes.
Not only you’ll learn by making mistakes of your own, but you can also study the mistakes made by other people who are trying out the same things as you are. Here are the common mistakes forex traders do.
Don’t over trade.
Over trading takes place when the trader insists that there are better opportunities at the moment, but the truth is, there isn’t any. This mistake happens mostly to new traders, who just can’t help but trade and trade. What happens is they end up in a trade that’s poorly executed leading to an eventual loss.
Over trading can also start from making a lot of trades at a time, and by using more margin than you should.
Don’t use too much leverage.
Leveraging and trading on margin are two of the best and biggest advantages in forex trading.
How can leveraging be wrong? It’s when the traders use too much leverage. Like what people always say, too much of everything is bad, and that also applies to forex trading.
What does it mean to ‘use too much leverage’? It’s when the balance in your account is small, but you make a huge trade. If the forex market moves against your current position even by just a small amount, then it can lead you to have large losses which might be harder to recover from.
Don’t predict without proper basis.
This usually happens to new traders: they try to pinpoint pairs that they think will turn around and will move to a different direction. This is very difficult to surpass; even professional traders are having a hard time having predictions, so new and amateur traders should think twice before making such an attempt.
Don’t be fooled by ‘foolproof’ broker or system claims.
Traders tend to use up much of their valuable time searching for that ‘perfect system’. The problem is, there isn’t any. Eventually, you’ll encounter systems that will have loopholes and setbacks. You’ll just have to live with the limitations that will teach you a thing or two as well.
The systems they advertise online are usually just means for them to rack more money. What you need to do is use one that works the best for you, and simply take it from there. If it does most of the things that you require, then it could be just what you need.
Again, mistakes are just normal. What you need to do is to learn from them to avoid committing the same mistake. Remember, you’re risking your hard-earned money here. Make sure that you won’t lose it just because of a could-have-been-avoided blunder.