What is the secret to success in Forex Trading? What do successful forex traders do that other unsuccessful traders don’t?
If you would like to avoid the common mistakes made by inexperienced traders when starting with Forex Trading, then follow the tips provided in this article and I guarantee you that you would not have to fall back ever again.
Be confident: (DO) Confidence is something that would enable you to take risks and trade better. You may lose confidence in case you lose money in early stages of your trading career, but to avoid this situation it is necessary you get ample knowledge of FX before you start trading.
Look at pairs rather than individual currencies: (DO) Most of the people I have seen try to think of Forex Trading in terms of single currency. They must understand that currency trading occurs in pairs and you should look at the future prospects of a currency before exchanging your currency for that currency in a pair.
Unplanned approach: (AVOID) Strategy is something that can make you win a losing battle. Without a sound strategy you would only lose money and gain no profit whatsoever. So try to maintain a good but flexible strategy while approaching FX.
Small margins: (DO) Although margin trading may seem lucrative, practice where you can invest more money in the market then you have in your account. But this practice is risky, you should only increase your leverage as you become a more efficient trader.
Off peak hours trading: (AVOID) Avoid this at all costs. This is because of the fact that at off peak hours large hedge fund and institutions dominate and they can push the market to any side they want. This may in effect cause a loss for you.
Exit Trades gracefully: (DO) In case your are losing money on a trade, exit the trade as quickly as possible. Do not wait for the tide to turn in your favour, waiting for the market to become better may cost you more money than you were initially losing.
Excessive Analysis: (AVOID) Always try to avoid excessive market study and market analysis. Keep your trading simple and make profits with the flow of the market.
Gain Knowledge: (DO) We all know that knowledge is power. So before you start with Forex trading, get to know what it really is, what are the terminologies related to it and how can you trade in Forex. Once you are clear about all these terms, then only consider starting with Forex Trading.
Trading with Emotions: (AVOID) This should be avoided at all costs. Do not get disheartened if you lose money on a trade, because if you are sad and disheartened you are more likely to make bad decisions and lose money again.
Stay with the market flow: (DO) Always try to trade in the direction the market is going, never try to trade against the market direction. You’re profits would improve if you trade with the market rather than against it.
Keeping up to date with current news: (DO) Try to trade at times when news is being released to the public. Why? Because when news comes to the market, there is volatility in the market due to that news which leads to the big players changing their strategies causing a fluctuation in currency prices. So this is the best time to trade and gather the profits.
Trade current: (DO) Short term trading is much better than long term or futures trading. Most of the successful traders make a majority of their profits in daily trades. Try to focus on intraday trades rather than what is going to happen next month.
Unreliable Broker: (AVOID) A large number of brokers are out there just to grab your money and work for their own profit rather than yours. So in order to choose a good broker never rely just on the introductions and promises on the broker’s own website. Always consult blogs, forums, etc. before making a choice.
Interpreting News: (DO) Never rely on interpretations of the news by the media, always try to get the correct facts before applying your knowledge of the current news to your trades.
Demos: (AVOID) Do not put your trust into a demo trading account. Demo trading accounts are like a bad habit. They make you dependent upon large sums of money and leverages to gain profits, which is quite risky in a real account. So try to avoid using demo accounts for too long.
Focus: (DO) Try to focus one currency pair at a time. Trading on two or more currency pairs at the same time can cause distractions and may cost you a lot of money in trades.
Trading to pass time: (AVOID) Avoid making Forex Trading a way to pass your free time or a time to relax. This is because of the fact that efficient trading requires complete presence of mind and application of intelligence. Thus avoid making it a hobby and treat it like a business.