Even if you’ve progressed past the beginner trader stage and are improving your trades, you may still be making the same mistakes. Of course, the number of these mistakes should be decreasing, but emotions can sometimes overpower the mind and strategy, resulting in pips being lost. The following is a list of the most damaging and foolish mistakes you may make in Forex trading:
- Not placing a stop-loss – Sometimes you just forget to set your stop-loss, and other times you hope that the price will finally move in the “correct direction” and that a stop-loss will be an obstruction. This is incorrect! Always use a stop loss – it should be intelligently positioned to avoid a deal that didn’t go as planned from destroying your whole account.
- Using unrealistic large lot sizes – Even if you are 100 percent certain that this position will be profitable, don’t make it too big — a risk amount of 1% – 5% of your account size is enough. To make up for a deposit loss of 20%, you’ll need to earn as much as 25%!.
- Over trading – Everyone thinks it’s terrible to trade too much, yet it’s tough for a trader to stay away from the market when there are so many chances. Simply attempt to set a daily/weekly trade limit for yourself. Overtrading is a reaction to market pressures that is based on emotion. Avoid such trading selections at all costs because they aren’t guided by your thoughts.
- Closing the winning positions too early – well, as a scalper, this is the problem I have too. I close trades in profits so that they don’t end up going in negatives. It appears that getting a guaranteed reward is preferable to risking waiting even longer. However, general trading experience shows that closing winning trades early and waiting for lost positions to turn green is a bad strategy. Allow your winning positions to run and reduce your losing positions as soon as possible!.
- Getting signals from multiple providers – It might be difficult for some traders to avoid this, especially if they admire a Forex guru. The only way to become a competent and successful Forex trader is to trade with your own plan and take full responsibility.