The most common mistakes novice forex traders make
Every beginning is associated with some degree of uncertainty, but also with a lot of emotions and possibilities. This is why you should not let these common mistakes which beginners make get on the way of your success.
1. Trading without a clear plan
In order to develop a consistent and profitable strategy, you should have a clear and precise plan. Your plan should include entry and exit conditions and rules for risk management. Keeping a journal is recommended so that you will be able to track your process and follow your strategy.
2. Not cutting losses
There are different methods that traders could use to limit their losses. Beginners can start with the stop loss function and when they advance – they switch to trailing stops. Another very common mistake is to keep your losing positions hoping they will change direction. This is not impossible but you risk losing all of your funds in the meantime.
3. Having unrealistic expectations
Your plan helps you stay motivated and disciplined, but this doesn’t mean that you have to expect every position to be profitable. Whether your new venture is trading on the financial markets or learning to play the piano – you should expect to make mistakes. Accept these mistakes as part of the learning process and don’t develop unrealistic expectations. This way you will avoid being disappointed with the results.
4. Trading against the market
Often a trade will go in the direction opposite to the one you might think. A significant amount of traders, especially the beginners make the mistake of trying to “reverse” the trade by increasing its size. This is a very risky tactic and often leads to traders losing all of their money in their attempts to recuperate the losses.