Making mistakes is a common thing; we all do it from time to time and there is no shame in that. Forex trading is no exception.

Making mistakes is a common thing; we all do it from time to time and there is no shame in that. Forex trading is no exception. When you first encounter this new market environment, you are very likely to make a couple of wrong decisions which will set you back. A profitable trader knows how to learn from their mistakes and you should do that as well.

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1. Trading without a clear plan

Planning every step you make in advance is very useful. However, some traders continue to trade without a strategy ignoring this advice. They either realize their mistake and eventually sit down and rethink their approach, or they simply give up on trading. Planning a solid strategy is not difficult. As a matter of fact, it is just a list of rules you must follow every time you trade. A plan should be individual and suit your financial status as well as your lifestyle. It is supposed to make your trading easier and keep you in line. Read as much as you can and learn from other traders. Explore different trading styles and strategies and you will eventually come up with a plan which will work for you perfectly. Trust me, it is a must.

 

2. Emotional trading

Emotions can be a powerful factor when it comes to trading on Forex. The best case scenario is to leave them out altogether from your trading strategy. But sometimes, you simply can't. You are bound to make this mistake at least a couple of times. Perhaps you are on a winning streak and you overestimate your abilities and you want to earn even more money because you feel ecstatic. Or maybe you have lost the majority of your funds and the feeling of guilt is eating you up so you make even more wrong decisions which will eventually lead you to hitting the zero on your account. Experienced traders are capable of shutting down the emotions and think rationally, sticking to their plan no matter what.

 

3. Not educating yourself enough

Forex trading requires of you not to only invest your money, but your time as well. Some traders ignore one of the crucial steps, and that is reading and learning about the way the market works. Covering all bases is a must. It is clear that you have to know a lot about Forex before you start trading but learning shouldn't stop there. You need to constantly stay informed. Find the books written by other traders or experts in the field of economy. Following blogs and participating in forum discussions is also a great way to go. Big media outlets and magazines can aid you as well. There is no space for laziness if you want the success.

 

4. Overtrading

This mistake is closely linked to emotional trading but it is not exactly the same problem. Driven by wanting to earn a lot of money in a short amount of time can cause a great deal of inconvenience. You need to know when to trade, when not to trade, and when to make your exit. If your trading strategy consists of short positions and it is not getting you anywhere, make an adjustment, change it up a bit. Try long positions and think them through. Be wise and incorporate discipline in your trading.

 

5. Not knowing when to exit

Traders who are on a losing streak but they still clinch onto their trading style like there is no tomorrow are very common in the market. They hope that the trend will reverse itself and that they will return all the funds they have lost. Well, the chances are that won't happen. The best thing they can do is to admit their mistake and make a graceful exit. The worst case scenario? Doubling up their position and not using a stop-loss.

I am sure that you don't want to end up as a failed trader, so keep your eyes open, focus, and don't be ashamed to admit to yourself that you made a mistake. It is all a part of the learning process. If you need some more education, it is always a good idea to read best Forex books from Forex-Library.com.

 

This article is contributed by Forex Bonus Lab, a website dedicated to the most recent Forex bonus offers and the reviews of the leading brokers.