Avoiding Trading Mistakes – These Common Mistakes Will Cost You
Forex, or Foreign Currency Trading can be an extremely profitable venture. Or it can be a complete bust. An astounding 95% of amateur traders fail in the Forex markets, many bankrupting their accounts.
So does that mean that you shouldn’t even consider Forex trading for yourself?
Like any venture, you need to evaluate the upside, as well as the pitfalls to avoid.
Here are 7 common mistakes to avoid when you are learning how to trade in the Forex markets.
This is THE #1 MISTAKE of amateur traders, and it can’t be emphasized enough. A good rule is never to put up more than 1-2% of your account on any one trade. That way, you’re not risking your trading capital, and you’ll have to lose 100 trades in a row to wipe out your account. Keep the Risk to Reward Ratio at 1.5 to 1.
Trading is a Business, Not a Hobby:
Too many traders don’t take trading seriously. They ‘dabble’ in the markets, or take the approach of ‘trying it out’. Treat it like a business, and it will reward you like one.
Invest in Your Education:
Trading is a skill set that you can certainly learn, but take the time and money investment into learning the right way. Too many bad habits can be picked up by learning ‘on the fly’ from cheap courses. Most professional traders have gotten there by learning from a mentor. Specifically, someone holding their hand through all sorts of market conditions. In the end, its an investment in yourself.
Beware of the Latest and Greatest Strategies:
While there are excellent strategies out there, it won’t do you any good unless you have the trading experience to apply it. Start with learning the basics.
Is Trading for You?:
Trading takes discipline. The discipline to learn and the discipline to stick to rules consistently. If you’re not a disciplined person, or you like to bend the rules, recognize early that trading may not be for you.
Keep Your Expectations Realistic:
While there is tremendous money to be made in the Forex, and you can accelerate your retirement, it won’t happen overnight. At least, not when you’re learning how to master trading skills. Think about building wealth slowly, let your account build and accrue. Most of all have patience, and don’t set yourself up for failure by unrealistic expectations.
Don’t Spread the Word About Trading:
At least not yet. To overcome and master the psychology of trading, you need a positive mindset. Unfortunately, well meaning friends and family who don’t know anything about trading will very willingly offer their advice. These thoughts can stay with you, and set you up to sabotage your trading. Best to keep trading to yourself for awhile, until your confidence is solid.