If you think about going into the currency trading business then you need to know this: 95% of all people who tries currency trading end up losing money. In this article we will point out the 7 most common mistakes beginners make and what you can do to avoid them.
Common Mistake #1 Trading Currency’s Instead of Trading Currency Pairs
A common mistake among people who try forex for the first time is currency versus currency pair.In forex you trade currency pairs. You need to find out how these two currency’s impact on each other. If you just look at one currency things will go very bad. You need to know the both sides of the coin when you trade.|
Solution: Research as much as you can about the two currencies and not just one.|
Common Mistake #2 Not Keeping Focus
Another mistake among beginners is not being focused. Don’t do the mistake of “thinking” that you going to make alot of money and then spend it before the profit has become reality.
Solution: Focus on what you are doing right now. Then set reasonable stop losses when you do the trade. Now there is nothing more you can do. The market will do what it wants. Just enjoy.
Common Mistake #3 Doesnt Have a Strategy
Many newcomers doesn’t have a strategy. They just think: Ok my strategy is to make some money on forex.
Dont do the mistake thinking that “making money on forex” is a strategy.
Solution: A strategy should be like a map. You should write down which pairs you want to trade.
How you want to trade it, when, how much, etc.
Without a strategy you don’t really know what to do. With a plan or a strategy you will find that its becoming much more easier to focus.
Common Mistake #4 Lack of Knowledge
You need to know how the system works, don’t just open an account and think that you will make money.
The lack of knowledge is almost a sure-fire way to lose money on forex.
Solution: Learn the system. You need to know the basics. Understand this: Global events and news are the biggest influences. Then you have to research how different events influence the market.
Common Mistake #5 Too Cautious
One mistake is to place stop losses to tight. The fear of losing money takes charge and stop losses are put to close.
Solution: Give your trade a chance to prosper. Set a reasonable stop loss so your trade has some space to move on and a chance to produce a profit.
Common Mistakes #6 Let Emotions Decide
This one is the most common mistake beginners make. They let emotions in and allows them to take control. This is very unwise. We make more mistakes when feelings and thoughts are allowed to make trades.
Solution: Follow your strategy and do it to 100%. When you created the strategy you were analytical and logic. Forex is much math and logic.
Don’t let your feelings fool you.
Common Mistake #7 Trying to be Smart
Beginners think that you will have to be very smart to trade forex. They spend hours and hours to check historical trends.
A matter of fact most successful people with forex doesn’t try to be smart. They have a strategy and are following it.
Solution: Try to look at things as playful and fun. Don’t try to be smart. It’s better to follow a good trading strategy.