There are several Forex Mistakes that can really mark the end of your trading journey. It is said that personal psychological challenge constitutes 90% of the struggle to achieve consistent success as a Forex trader. Can it be true? Answer Yes and no? Many big traders who have written about their experiences, have talked about how their own internal psychological struggles have caused them losses, even when “knew” that whatever they were doing was wrong. There can be no doubt that psychological factors are very important in the game of Forex or any other financial market.
What are the Forex mistakes ?
Forex mistakes are basically wrong decision taken by Forex traders. Not getting the right mental set up for trading is also a mistake. Mastering the psychology of trading will not provide money for itself but if you are not aware of the tricks that your own mind is trying to reproduce, is likely to cause you loss even if you are a good trader and has been successful in your trading decisions so far. There are hundreds of ways that a trader can use to sabotage himself.
You should be aware of various psychological traps that traders usually fall. Sometimes, you just have to experience something by yourself to learn from it: “nothing teaches better than direct experience”. Hopefully some of these points will offer a new understanding of trading errors that has already committed or alerting traders in advance of errors that is not yet committed by him. Try not to blame yourself when you make a mistake in trading: dont try to get your “revenge” with market.
10 Forex mistakes
As I said that there are plenty of mistakes done by Forex trader’s, especially the new comers in this arena. But there are 10 mistakes that can really ruin your trading life. We would like to discuss these mistakes, so that you dont do that anymore-
Mistake 1: Not believing in your own Methodology
It is surprising how many people trading in markets unconvinced that can make money or at least make sure you have a good chance. Even if you think you believe in what you are doing, are you sure you do not have great doubts on that surface? The answer to this problem is to test its methodology. For example, if you follow the trends, take time to make a review of a large amount of historical data. Does it show good results most of the time? Is it based on a solid concept, as mean reversion or momentum? If the answer to these questions is yes, you must believe in what you are doing and do not forget that you believe in it.
Mistake 2: Not having a plan and sticking to it
This sounds very obvious. It is not just about having a plan, it is to have several plans and leave some flexibility.For example, if you are doing day trading, you must have a method to decide each day which currency pair or pairs will negotiate. However, if the couple chooses not going anywhere, while another pair is fired, you may want to reconsider your decision rather than just “stick with the plan,” for example, allowing the option to change his mind every 1 hour. This is a “plan” but a plan may also include some flexibility structured.
Mistake 3: Making a plan and but not implementing it in real life
It is quite easy to make a plan that works on paper, but living that plan in real time can be something completely different. A good example is to make a plan to make hundreds of operations more or less in a year and expect your account suffers a 20% reduction as it takes a streak of 20 consecutive operations with losses. You can do the review in a day or two and decide whether such losses are acceptable. Probably you feel very different when it happens weeks or even months losing real money over and over again while watching shrugging his balance.There is no good answer to this dilemma, just keep in mind that spend months of time in an hour or so is not necessarily a good psychological practice for negotiation bad times.
Mistake 4: Over trading or Not trading much
These are the opposite sides of the same problem. The best way to overcome this is to tell yourself every day that you are willing to place multiple positions in a day or none at all, and that what we do will depend entirely on the market situation rather than the condition your wallet or your mood. There will be days without action and action-packed day. You have to adapt to circumstances.
Mistake 5: Make “agreements” with the Market
Tell to tell yourself that if the price goes up another 10 pips or if not up in the next hour, you will close the position. This is simply your mind under your anxiety. Ignore it, stand firm, and only exit positions according to their plan.
Mistake 6: Being impatient To Take Profits
You see a profit on the table and think how nice it would take and stop trading, thus losing what could be a more profitable for the day. This is laziness and self – indulgence and must be controlled. The only reason to take profit should be that you have a real reason to believe that probably it will not go much further in the desired direction. Let the market point it out , do not anticipate.
Mistake 7: Protecting against possible losses
This is really the same as the eagerness to take profits. It may be that you need to rethink your strategy and risk management of trading.
Mistake 8: Leave Running Positions With Losses
There is a simple way to avoid this: always use a strict stop loss and do not constantly expand it.
Mistake 9: Don’t give excuses for trading loss
It is very easy to make excuses. It is your responsibility to ensure that you do not miss the bus or get distracted or in a bad mood. Once you take responsibility for your trading activity, your mood may improve as you see there is a way to make things better. It’s a marathon, not a sprint.
Mistake 10: Interminable chase for the “Holy Grail”
This is one of the most costly Forex mistake. Every trader seems to look for Forex mistakes. You make some tests and design a strategy that offer an average of 20% profit per year. But wait! Try something else to earn even more, say 25%. Is there anything better out there? Perhaps, but this search and test process can be time consuming. Consider this: if you spend 6 months doing tests rather than operating in a committed way to find a way to win 25% instead of 20% will simply lose 10% and will take a year to compensate.Keep looking by all means, but do not let that affect your trading. Even if you have a fairly robust methodology, that need not to be perfect!
The bottom Line: Forex mistakes
Well, I hope this article helped you to clear your head and think on this matter from a different perspective. And I believe that you will correct your errors and make your self comfortable in trading. But, that’s not all! There are plenty of other Forex mistakes that we can see Forex trader’s are doing now and then. We will try to discuss some other costly mistakes in next article. Till then bye bye!