4 Common Trading Mistakes
No matter how long you’ve been trading forex, you are more than likely making a few mistakes that can cost you time and/or money. For beginners, it’s assumed that they will make mistakes and learn as they go. But for the more seasoned trader, it’s a little bit tricky. Their heads are so inside the trade that they might not even realize they’ve developed some bad habits or are approaching trades in a way that is not so efficient. So whether you’re new to forex or you have years of experience, it’s worthwhile taking note of this list of four of the most common trading mistakes.
Making Changes to Your Trading Strategy
Here’s the thing. You spent a lot of time and put forth great effort to come up with the best possible trading strategy. It fits into your plan, it defines how you trade and hopefully meets your goals. So believe in it! You developed it with the best tools available, so use it. The market can come and go. It can rise or fall, or move any which way it wants. Some trades that meet your trading style and strategy will seem perfect going in but come out as a loss. Other trades will bring you nice profits so you can keep going. But even when you lose, don’t always blame it on your trading strategy. Every trader goes through slumps but avoid the knee-jerk reaction of changing your strategy. Believe in it and stick with it.
Not Updating Your Trading Journal
If you intend to learn as you go along, it’s important to keep your trading journal up-to-date. This is how you will learn from your mistakes and become a better trader. Some traders might think they know everything already, so they don’t need to review every trade, but that is far from the truth. They more meticulous you are with your trading journal, the more you will pinpoint where trades went wrong or how you could have improved them. Record every detail pertaining to entering and exiting trades to know how to avoid bad entries or exits with unfortunate timing.
Reviewing the brokers that you work with is also a crucial step to evaluating whether these brokers are reliable, consistent and dependable. These Reviews should always be objective.
Not Keeping Current with Changing Markets
The forex market is constantly on the move. The best way to begin your trading session is by checking the international news reports. Find out if there was a big event somewhere in the world that will affect that country’s currency. Keep track of important financial statements, which are usually posted on specific dates. These can be annual or even quarterly but keep a calendar so you don’t miss anything. Watch what is going on with other currencies and any news reports that might affect the market before going in.
Not Placing Stop-Loss Orders
Placing trades without putting in stop-loss orders can be quite costly. If you put in a stop loss and your trade goes south, the amount you lose will be limited. Be conservative. Don’t try to make all your profits for the month on one trade. Use stop-losses wisely so you can grow your account for the long term.