Trust me, i have made these mistakes before time and time again.... So, check it out... it may help you improve on your Forex trading
4 Common Mistakes Made By Forex Traders
Trading can be a very counter-intuitive business, it's tough to get it right, even when you know what the rules are. Traders are always making easily preventable mistakes. Here is a list of 4 of the most common mistakes traders are making.
Mistake 1 - Impatient:
Far too often a trader just wants to get into a trade and get out without waiting for the proper signal, just so they can be done trading for the day early. Other times, a trader thinks that if they get in a trade that they are sure will generate a signal soon, they can get a few extra pips. And other traders feel that if they are staring at their charts but not in a trade that they are wasting time, so they "find" a trade that isn't really there.
More often than not, an early entry like this never does generate a signal and they are in a losing trade right from the time they entered. Being impatient is one of the worst traits a trader can have, and it's something a trader does on purpose. Wait for the signal and make your money.
Mistake 2 -Tunnel Vision:
You've just spotted a trade setup, your indicators line up and your oscillator has crossed over (or whatever your signal may be). You are so excited that you have a trade signal that you jump into the trade only to have it go against you.
Inexperienced traders, and even some pros, get so excited about the trade they can take that they have failed to make further assessment of the market. They get a sense of tunnel vision and can't see the market for what it is. For example:
- was the market ranging
- were you at a key level of support or resistance
- was the market up against an obvious trendline
- are you trading at a slow time of day
- was there red flagged fundamental news being released
Getting in a trade is great, it's always nice to make a few pips, but many traders get into a trade without having any idea of how to get out. Before you even enter a trade, you have to know your exits, you will have 2 exits, but you might even have a third one.
-Exit number one will be how you exit the trade if it goes against you. This will be your initial stop loss, when disaster strikes, you will lose only a predetermined amount of your account.
- Exit number 2 will be how you get out of a trade when you are in profit. Usually this is your profit target, where is the most ideal location for a profitable closure of the position.
- Exit number 3 will be a trailing stop. This isn't used by everyone, but I suggest you try it out. A trailing stop is how your move your stop loss along as your trade progresses so that you not just minimize the risk on your trade, but actually lock in some profits. You can use your Trailing Stop Loss as your exit method and not have a Hard Target (Profit Target) to try and capture as much as the market will give you, or you can use it in conjunction with your profit target
Know how you will get out of a trade even before you get in, and follow your rules in doing so.
Mistake 4 - Personally invested in the trade:
Another term for this is to be "married" to your trade. A novice trader invests a little bit of themselves in each trade they take, and if the trade goes against them, they feel it reflects badly on the trader. Of course this isn't the reality, but when you are new, reality is often thrown right out the window.
A novice trader will hold onto a losing trade, even when the signals have all changed from buy to sell or vice versa. They will look for validation on a higher timeframe that it's ok to hold onto the losing trade. They become so committed to the position they are in that they will remove stop losses and even add a second position.
If you are in a losing trade, cut the losses. Traders lose, it's no reflection on you as a trade that this happens. What is a reflection on the trader is they haven't matured enough as a trader to close a losing trade.
Stick to the rules, notice the market environment around you and just take it easy. Being too stressed as a trader leads to all kinds of easily preventable mistakes.
Russ
Happy trading,
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