Human beings make mistakes, but not every mistake costs money. In the world of Forex, every mistake has a price tag on it. To help you learn more from others’ failures rather than your own, we’ve picked out 13 of the most common mistakes of traders according to forums. Make a good use of this list!
The lack of a systematic approach
No matter how godlike your trading style is, you won’t always do well without a cheat sheet. There should always be a plan, the other thing is that your plan can and should be adjusted under changing conditions.
Lack of algorithm
Without the algorithm, the risk of losing the deposit increases manifold. A clear algorithm implies a step-by-step sequence of your actions depending on the trading situation.
Not placing stop-loss orders
With this approach, the trader is sure to be knocked out of the market sooner or later. The more profit you make in the beginning, the harder the blow will be when you lose it all. A good trader never takes a risk and puts a stop loss where it’s needed.
Lack of money management
Some traders don’t even know what it is. Money management is a large component of successful trading
- choosing the size of positions;
- knowing when to increase volume;
- knowing when to decrease volume.
Closing a trade before reaching a possible profit
Many people traders close a profitable trade earlier than necessary, losing good money on it.
Lack of habit of keeping statistics
Statistics is the basis for your trading system. It’s the only way to visually track where you’re making mistakes and where you’re earning. Trader’s statistics is your karma, which shows what you do and what you will do in the future. You can’t eliminate mistakes without statistics, because you simply won’t see them otherwise.
Changing your strategy during trading
It doesn’t matter how you may justify this flawed practice. You should improve your strategy only based on the statistics and outside of working hours.
As a rule, they lead only to money losses and huge drawdowns.
Trading while being emotionally unstable
It is recommended to trade only with a clear head and in a good mood, when there are no obligations or moral turmoils weighing over the trader.
The urge to do everything at once
The market will (hopefully) always be there, there is no need to rush. If you go overboard today, tomorrow you may have nothing to trade with.
Trading against the trend
Although many professionals brag about their ability to predict market behavior, trading against the trend is strictly inadvisable for beginners.
Excessive trust in gurus
No trading guru has ever proven more useful than self-education through statistics and reading the correct literature.
Ignoring important information
Before you start trading, you need to understand what the trading terminal is, how the margin and leverage are calculated, what is the spread, what factors influence the price change, what is supply and demand, what markets are like, how to analyze, what is liquidity and volatility and many other things. By answering these questions, you gradually come to understand the markets and begin to make the first steps towards a stable profit.