Trading forex is an appealing prospect for a lot of people aiming to profit from exchanging currencies, but it does present a lot of pitfalls. Those who are just getting into trading forex with Hantec Markets will need to avoid all of the common mistakes that first-time traders fall for. Successfully avoid any of the following actions and a full-time career as a forex broker could be on the cards.
Making Emotional Decisions
The main mistake any trader can make is not having a plan to follow. When you’ve developed a good trading plan the next mistake failed traders make is not sticking to it, and this is often when emotion gets in the way. You could lose a few trades then risk too much trying to win it back, or unnecessarily risk a lot of your stake when you’re on a roll. Separate emotions and investor attitude for the best results.
Disregarding Stop Losses
Stop losses are an essential part of any trading plan. There are some traders who think they are used by brokers to make a profit themselves but this isn’t true. They are there to protect your investments by preventing 100% account exposure, which could lead to you losing a lot in just a few trades. Set stop losses as a safety barrier for when trades don’t work out, as even the best traders experience more losses than wins.
Lack of Patience
Nobody becomes rich from forex trading overnight: it is a long-term game. One mistake first-time traders make is only focusing on the immediate, high frequency trades without the patience to wait. Look at longer time frames and you should experience more risk/reward success. Plus, you don’t need to spend as much time physically trading.
Risking Too Much
Traders who risk too much (usually over 1% of their capital on one trade) usually end up losing a lot more. Put in place daily maximums that you should trade, based on an average month and the amount of finances you have available. Therefore, no single trade should have too negative an impact on your accounts.
Leveraging is one of the main benefits that attracts people to forex trading, but it can also be a curse if misused. A lot of first-timers will take advantage of leverage and the maximum position, but if it fails then you can quickly end up out of the forex game. Avoid these common mistakes and you’ll have a better chance of making it as a forex trader.