We are always growing in our understanding of any trade or skill. Forex trading is no different.
We all mistakes and we are bound to because to err is human. However, a continuous strive for improvement should be the natural reaction to mistakes.
The first thing in the way of improvement that anyone can do is to recognize where they are going wrong.
To help you identify any mistakes that you might be making we are outlining seven of the most common mistakes in trading that beginners especially tend to make.
These may be considered the seven deadly sins of Forex trading as far as we are concerned.
Let’s take a look.
What does this mean in terms of trading?
It means to make moves without putting any thought into them. If you are just setting your stop loss somewhere because you feel like it and can’t justify it with reason, then you might be being reckless too.
It has cost many a trader their accounts so be careful.
Moving your stop loss too much, opening new trades without putting thought into it, or closing trades without giving the market a chance to hit your profit target are all consequences of restlessness and impatience.
This also stems from anxiety that new traders are often fraught with. So if you are just starting out in the market be especially vary of this and try to maintain calmness so that you can think with a cool mind and take reasonable decisions.
Restlessness and overthinking are two sides of the same coin. Both are equally dangerous and go hand in hand.
Overthinking can become breeding ground for a lot of other trading issues. How can you deal with this? Have faith in your strategy and in yourself.
You are bound to make some mistakes and lose some trades even if you don’t make any mistakes. So don’t put the pressure of perfection or 100% win rate on yourself.
Once you have taken a decision stick with it and if it culminates in a loss, take it and move on. It’s part of the game.
Arrogance in trading means becoming too comfortable and not keeping a close eye on your trades.
Some traders when they are experiencing a winning streak tend to get a little arrogant about their performance and feel they have cracked the code.
Unfortunately, there is no code. There is a great possibility that the market can turn on you any time. Therefore, stay on your toes and plan for losses and take the required measures in time so that you don’t have to face any major ones.
Has it ever happened to you that you are winning a trade and have hit your target, but you think staying in for a bit longer might make you more? However, when you do, the profit you had made initially is lost too and the market turns for the worst?
If so, we hate to break it to you but that was the result of greed. Greed sounds like an intensely horrible emotion and often we don’t want to admit that we feel it too. Truth is, all humans do. We all want more.
In trading though it can turn you into a gambler so it’s best that you stay away from it.
Some traders, after they lose a trade, try to take revenge on the market. This is rarely, if ever, successful. Usually it results in more loss.
Remember that the market does not know who you are and it is not especially trying to get you. The conditions are just not in your favour. So either change your strategy a little temporarily or better still stop trading. Call it a day and enjoy your day.
Being angry at the market only harms the trader and never the market.
Fear in moderation is good to keep us on our toes, but when it starts keeping you from participating in the market the way you ought to, it becomes a problem.
New traders who join the market having heard a lot about it, sometimes tend to be very fearful of it. This is natural. You can take your time getting used to trading.
However, do urge yourself to move on from that phase of fear and intimidation and start thinking like a professional trader.
We hope these will prove useful for you in correcting your own mistakes and help you become a more profitable trader.