Common Currency Trading Mistakes to Avoid
Everyone from the new trader to the experienced market analyst makes mistakes when trading. The key to being successful is either learning from your mistakes or avoiding the mistakes. There are certain common currency trading mistakes that can easily be avoided.
Currency Trading with Emotion
One of the emotions that traders are often faced with is greed. This generally comes about when the market is working in your favour and you are already making a profit. Holding out for those extra pips is one of the biggest mistakes you can make. Greed costs many traders a lot of money and turns profitable trades into losses. Emotions should never play a role in trading so making sure you have a strategy and risk management plan that eliminates them is the best way to avoid this mistake.
Looking for things that are not there
All forex trades must be based on fact. This is a statement that all traders should keep in mind to avoid trading on rumours or what they think is there. When analysing the market it is easy to see what you want to and not what is really there. This is why you should always take the time to double check your analysis and make sure every trade you place is based on solid facts. If you are unsure about anything regarding the trade it is best to not place it.
Not Looking at the Market
Many forex traders say that you should always keep an eye on the news because the forex market reacts to world events. The one problem with this is that the news can sometimes be misleading. Constant stories of predicted doom do not always affect the market and you should not trade on just the news. One mistake than many traders make is relying too heavily on the news and not looking at what the market is actually doing. You can easily avoid this mistake by using news stories as only one part of your trading strategy. Incorporating news trading with technical analysis ensures that you always see what the market is doing.
Not Being Alert
The forex market is constantly changing and this means you have to be alert. Only traders that keep their eye on the ball can make the most of sudden changes in the market. A mistake that many traders make is not keeping their eye on the market. As long as you have an open trade you have to watch what the market is doing. A sudden change could cause problems for you if you have not placed stop loss levels.
Ignoring the Small Details
There are always small details that foretell a change in currency pair trends you just have to look for them. Once you are able to identify these details you must heed the warning they are giving you. The biggest mistake that traders make is ignoring these small details. When these details are ignored you will be caught out when the market changes and this can lead to losses even if the position was in profit. To avoid this mistake you should always pay attention to the small details and never disregard them.