Forex trading has proven to be a very accessible money making formula for many people, since you don’t need a lot of money to start trading, but success is not that easy to attain.
While there are many Forex investors who are earning a very good living, a lot of traders still cannot seem to be making money.
Here are the biggest Forex trading mistakes you need to avoid, in order to start making a solid profit
You jump into the real Forex trading too soon
There are countless websites and apps that allow you to ‘play’ trading. They offer a starting bonus and you can start testing various strategies, see how it all works etc. Although given this chance to not trade their own money, a lot of beginner Forex investors just get bored and give up their test accounts way too soon.
As you can guess, their lack of experience soon starts to show and they lose money fast. Their own money.
This is why we advise you to keep your test account for as much as possible. Are you still not convinced you are having good results? No worries, move into another similar site/app and create another test account.
Test trade for as much as you feel comfortable, until you see some good returns.
Only when you are starting to earn money or at least not lose too fast, you are ready to start trading for real.
You don’t read enough
The moment you embark on a new journey, it’s imperative that you get as educated as possible. Read books, follow some great forex investing blogs, watch trading videos, become a member in a good Forex forum.
The more information you can amass, the bigger are your chances to become successful with Forex trading.
It might seem boring to keep on learning, but it gives you an edge.
I’m a web designer and have done this work for 15 years already. I’m a senior in this industry, have a lot of experience and could easily just enjoy my life.
Instead of giving up education, I’m constantly reading and learning. This allows me to stay current with the latest developments in web design and internet marketing, to have my own money-making website network and provide my clients with the best work I can possibly provide.
You don’t have a Forex trading plan
Wait, I have to plan my strategies?
Yes, just going with the flow is not the best way to become successful with Forex, it’s a good way to start losing a lot of money. Maybe you are an absolute genius and can go without a plan, but for the most of us, regular people, a trading plan will cut losses and allow us to trade better.
What should you plan for?
If you are scared about having a 15 page trading plan, rest assured, this plan can consist of very few lines – when are you willing to enter the trade, what’s your stop loss, how much are you willing to risk in a trade etc.
You don’t record your trades
Don’t rely on your memory, record ALL your moves. In time this will allow you to see your trading patterns and improve on them, see where you make mistakes, what trading strategies prove to be more successful etc.
You don’t have a stop loss
A stop loss is an offsetting order that gets you out of a losing trade, as soon as you start losing money. If the price is moving against you, there’s no reason to still lose money on that trade.
Just accept your loss and move on to the next trade, that can be successful.
Place the stop loss at the same time when the trade is done, not afterwards. You’ll want it to be active as soon as you have entered the trade, since it will allow you to control your losses as soon as they start happening.
You rely on indicators and fancy tools
As Forex trading becomes more and more popular, there are many tools developed for the traders. Some are useful, but some of the fancier ones are not. While they are supposed to make trading easier, they hinder your chance to actually learn and understand the trading process.
It’s similar to using only your GPS when traveling. While this is convenient, since there’s a clear indicator of where to go next and the voice tells you to go right, keep left or turn around, you should be able to drive using street signs as well. This improves your orientation skills and understanding of how to get to a desired location.
You add to a losing day trade
We advised you to set a stop loss on each trade, so that you can control risk and avoid another costly mistake – averaging down.
To average down means to make additional trades on a losing position, in the hope that the price will stop moving against you. It’s not a good idea, since the situation can get even worse and, instead of losing some money on that trade, you’ll lose exponentially more.
Never add to a losing day trade. Set your stop loss and, as soon as the price goes against you and hits it, just exit the losing trade and move on. Recovering from a small loss is easier than recovering after a large one.
These are the biggest Forex trading mistakes we could think off. What else would you add?