There are much more losers than winners in currency trading and do you want to know how to be at the winners' side? A wise guy learns from his own mistakes but a smarter guy will learn from the mistakes that other people have made. So I have done a thorough research on the common forex trading mistakes that most people make and now you can learn from it as a personal development to be a better trader.
Mistake #1 - Over leveraging. It is true that leveraging is one of the advantages of a forex strategy. But at the same time, if used incorrectly, it will be a disadvantage because of over leveraging. Many people does not consider how much risk they will be taking when they decide to trade big using high leverage on small trading capital.
Although you have the potential to win more on the trades but the risk is much more as one highly leverage trade that loses can wipe out a small trading account. One should only risk at the most 5% of his trading capital for per trade.
Mistake #2 - Over trading. Often, over trading occurs when traders use forex scalping method. They would try to find opportunities to trade even though there is no quality opportunity for them. In the end, there are more losses than the gains.
It does not only happen to forex scalping, it involves other forex trading techniques as well. So to avoid this mistake that many people make, you should follow the rules of your forex trading system and trade only where necessary.
Mistake #3 - No Patience. Currency trading is an activity that will really test your patience and if you don't train yourself to be patient, then surviving in this market is very tough. Long time ago, I thought I can maximize profits by rushing into a trade when the forex trading signals have not shown.
But most of the trades ended in losses because I was not patient enough to wait the forex indicators to confirm the trading signals. So if you can follow the rules of a good trading system, then definitely you have good patience.
Mistake #4 - Chasing after the price. If you have noticed, this mistake occurs when you have no patience. Traders feel uneasy when they missed an opportunity to trade and then chase after the price. The price rebounded back and triggered their stop loss. A forex tip for you is, never trade too far from a low value Moving average (e.g. 6 EMA), trading opportunities will always come.
Mistake #5 - Too greedy. Once you have a trading plan, stick to it and don't modify it because of your greediness. If you have a risk to reward ratio for profit taking, then be it. Don't aim for higher profits when your hunch tells you so. Even breakeven is considered as winning in currency trading. As long as you do not lose big and profits are more than losses, you are considered successful if you maintain this consistency.
Mistake #6 - Forex Scalping means fast profits. If you let me choose a forex day trading strategy and forex scalping, I will definitely drop the latter. I have never seen many traders got high success using that forex strategy because valid support and resistance does not work in such a small time frame.
There is no free lunch in trading, so you do not expect fast and huge profits in a short period of time. Any huge gains will definitely take some time to build even if you have a marvelous forex trading system.
Out of the many business opportunities out there, forex trading can be a very lucrative home business for those who want to be their own boss. However, to succeed, you must have the discipline to follow a good trading system, control your emotions, learn from your mistakes and never to repeat them again.