It is about 5 mistakes that every forex trader should learn to avoid in their trading life.
Source: Inlinefoex.com
1. Over Leveraging
By far the most common and most deadly of the trading sins. The massive amount of leverage offered by forex brokers can range from 100:1 or 200:1. to as high as 2,000:1 or 3,000:1. At 3,000:1 leverage you only need around 333$ to take a 1 Million dollars position.
Don’t get me wrong, leverage is a right not an obligation. Just because your broker offers you 3,000:1 leverage doesn’t mean that you have to take a 1 Million dollar position with your 500$ account. But it does mean being responsible. Keep your risk per trade low, never risk more then 1 or 2% of your account.
SEE ALSO : How to Control Emotions While Trading Forex?
2. Not having a Trading Strategy
Most traders especially beginner traders trade without a trading strategy. They trade blind, often changing up their methods on a daily basis depending on what works in the moment.
Always have a formulated trading plan. A good forex trading plan should have the following elements:
- An Entry Point
A trading strategy should always have a well defined entry point. Write down the rules for entering a position and post them on your monitor where you can see them. If you trading strategy is not fully automatic just write down the main rules and stick to them!
- An Exit Point
Where do you get out of a bad trade? Do you cross your fingers and hope for the best? Hope is not a strategy, always have a predefined exit point and write it down right next to your entry point rules.
- Trading Size
Do you know what will be your position size before you get the entry signal? Or do you vary your size based on how you feel once you get the alert to enter? The size of your trades should be directly related to your trading strategy. In general a good rules of thumb for newer traders is the 1-2% limit I talked about earlier
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Happy trading
Yours sincerely,
Check Out my other posts here- My Justinnation
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