Forex trading is a great way to make good money by leveraging your capital against the small currency movements which happen every day. Unfortunately it can sometimes get a bad name due to all of the systems and courses online which promise to make you rich overnight.
The good news is that you can still make money from trading currencies, but there is a steep learning curve and plenty of mistakes that you will need to avoid. To get you started, here are the worst ones:
Greed
Greed can cause you to forget about the rules you have put in place that might be telling you to get out of a position. Holding on to make sure you get the maximum profit in a profitable trade is important, but getting greedy and holding on too long can lead to sudden losses.
Impatience
If you have a good understanding of the market and your strategy you should be able to pick positions well, but sometimes opportunities just don’t seem to be happening – staying disciplined and patient in these times will prevent you from entering positions which you know you should stay out of. Instead, spend some time reading the news, check a currency converter periodically or just blow off some steam and come back later to see if things pick up.
Chasing Losses
A good currency trader makes more money from the wins that he loses on the losses, but sometimes a string of losses will happen; guaranteed. If you get a string of losses it is easy to lose your head and start taking risks in an attempt to win it all back – if you feel the urge to do this, take a couple of days off, analyse your losing trades and come back prepared to trade better than before.
Lack Of Focus
There are all sorts of different systems out there which tell you wonderful and clever ways to make your Forex trading easy – but it never will be easy. Try to avoid overload on these systems, pick a simple strategy and put in the hard work to fully understand what you are doing, this focus will make you a better trader in the long run.
Looking For Shortcuts
This is kind of similar to the point above, but possibly an even more dangerous mind set. If you are looking for shortcuts you presumably believe there is an easy way to succeed, and until you accept that this isn’t the case, you might as well be gambling.
Fear
Fear isn’t a common problem, but it does happen; if you find a good spot, and all the signals are saying go for it, but you hesitate and enter a position late, you are letting fear chip into your already narrow margins.
Gambling
You probably think that you are not doing this; all Forex gamblers do. Each and every position you close, win or lose, you should be able to justify to yourself exactly why it was the right move. If you ever answer something along the lines of “I just had a feeling” – like it or not, you are gambling.