A Forex trader makes many mistakes when he enters a trade. If he is a beginner, then his lack of knowledge may even make a challenging situation worse. These mistakes can ruin the entire trading career of an investor.
Mistakes that Forex Traders should avoid
These are the mistakes that every FX investor should abstain from doing –
Overtrading is a common problem among beginners because they think that frequent trading can help them to earn more money. Experienced investors advise the newbies to enter one trade per day. People can’t avoid their temptation to enter into trading frequently. If you can’t control yourself from over-trading, it will be harder to profit consistently from the market.
2. Wasting a lot of Time
People waste their precious time thinking about trading and looking only at the chart. It is similar to over-trading. Professionals always recommend spending time on developing the skills and analyzing the market instead of looking at the charts. Every newbie should make progress by following a specific trading plan. And always try to get open the account at Saxo as they offer premium environment to retail traders in Hong Kong.
3. Making a Wise Decision
While making a trading decision, you should be careful about it. Newbie day traders make this mistake too often because they lack sufficient knowledge and experience, and they don’t even realize whether they are making a wrong decision or not.
Time frames play a crucial role in determining the success rate of an investor. There are generally two types of time frames in the FX market – i) lower time frame and ii) higher time frame. Investors who prefer doing their businesses in shorter time frames are regarded as a short-term trader. In contrast, investors who prefer to be in a higher time frame are called a long-term trader. Based on this time frame, you have to design a trading strategy.
4. Testing with a Demo Account
An FX businessman can receive multiple benefits by using a demo account. Experts always recommend using a demo account before entering a trade. A businessman can improve his confidence level by using a demo account or can learn the basic knowledge about the trends and patterns. Besides, you can test your trading strategy by utilizing a demo account. After developing a new technique or modifying an existing one, nobody can understand whether the plan will work or not. Using a demo account can help a trader to realize the efficacy of his business strategy.
5. Neglecting the Stop-loss Limit
Many businessmen don’t feel the necessity to use a stop-loss order because they don’t have any idea how setting up a stop-loss limit can save them from facing a massive financial loss. Setting up a stop-loss order will automatically close a trade when the market starts moving against your fortune. As soon as the graph exceeds your pre-determined limit, the business will be ended automatically.
6. Avoiding Money Management Techniques
Money management techniques include checking the risk to reward ratio, buying and selling techniques, and so on. Most of the traders concentrate on the reward and money, which is not a good idea. Instead of this, they should focus on the money and risk management techniques to reduce their financial losses.
7. Being Emotional
Many businessmen make wrong decisions based on their emotions, which is never acceptable. Remember that your feeling can never control other factors of the market. So, while making a decision, make it from your trading strategies. The best way to avoid being emotional is to stick to the trading strategy. A fully designed trading plan will guide you in every situation even if you face a market crash. You can learn what you should do and what you should avoid during a challenging event. Most of the businessmen make that wrong decision in this period.
These are the seven mistakes that every Forex trader should avoid while entering the market.