Here we will outline 10 common forex mistakes, make any of them and you will join the 95% of traders who lose. So here are the forex trading mistakes to avoid, if you want to achieve currency trading success.
1. Relying On Someone Else For Success
Many novice traders think they can buy success from someone else and while there are plenty of people who can help you – they can not give you success, only you can do that.
If you buy a system from someone else, make sure you know the logic it's based upon, if you do not, you will lack confidence and will not be able to follow it with discipline.
2. Day Trading Works
More novice traders try forex day trading than any other method and their duped by hyped advertising and sales copy however:
Day trading does not work, never has and will will – all short term movements are random – period.
3. Forex Markets Move To a Scientific Theory
Many people think there are ways to beat the market and they believe in the people selling systems that have found the scientific formula for market movement.
There is a huge business in selling courses based upon – Fibonacci, Gann and Elliot wave but they do not work – why?
Because if markets moved to a scientific theory, we would all know the answer in advance and there would be no market!
4. You Need to Predict to Win
If you predict where prices are going to go you will lose – why?
Because predicting is simply hiring or guessing and the market will not reward you for this, instead it will destroy your equity. Rather than trying to predict, use momentum indicators to confirm price momentum has turned your way before trading.
You will trade the reality on your forex charts and be trading with momentum and the odds will be on your side.
5. Markets Move to Supply and Demand Fundamentals
Yes they do but trying to follow and trade them is impossible – why?
Because we live in a world of instant communications and fundamental news is instantly discounted in the price, so you can not win using it you are playing catch up.
Furthermore, while the fundamentals are important they do not move markets – people do.
Learn this equation:
Supply and Demand Fundamentals + Investor Psychology = Market Movement
You need to be aware of this equation and remember humans are motivated by emotion so prices do not always go the way you or I think.
The easiest way to get around this is too simply to follow action on forex charts and let price action tell you where prices are going.
6. Online News Sources Are Useful
Good stories – but as we have seen fundamentals discount instantly. Also what you are seeing on the news is peoples opinions, very convincing and more often than not wrong.
If you want to keep your emotions out of trading do not listen to the news.
7. Leveraging Is The Key To Making Profits
Yes it is but be careful not to over leakage. You can get 400: 1 from many brokers! but use it wisely not rashly.
Most traders simply leverage up to far do not make this mistake – 10: 1 for most traders is ample.
8. You Do not Go Broke Taking a Profit
If you do not run your profits you will not cover your losses. Many traders try so hard to avoid risk they actually create it, by giving themselves no chance of winning. Do not make this mistake, take calculated risks and run your profits and do not snatch or tighten stops to quickly!
9. The More I Put In The More I Will Get Out
Not true at all – you do not get rewarded for effort in forex trading, you get rewarded for being RIGHT about your trading signals.
Do not work hard for the sake of it – it wont help you!
10. Confidence and Discipline Are Easy
There anything but to acquire them takes a deep understanding of the method you are following (this is why if you follow someone else you wont make money) and also a deep understanding of your emotions, from this understanding comes self control and discipline.
So there are your 10 forex trading mistakes, there are more but these are the main ones that contribute to 95% of forex traders losing their money.