You can find many opinions and thoughts on the internet that say forex is kind of a game and is compared with casino. Having big profits is a matter of luck rather than using your skills and experience say many opinions. However, people with regular income work in the forex market, spend their time, do analyze, and all that indicates they are not lucky, they just do their work.
If you are a beginner in the forex market and also want to make it profitable for you, let’s talk about the most common mistakes. There are many traders whose deposits can grow extremely quickly and then, suddenly get empty because of wrong deals one after another. Following simple rules and avoiding the common mistakes will considerably increase your chances for constant profits and will make your forex activity look like a business and not like a casino game. So here are the ten mistakes of forex beginners:
1- Lack of experience in the forex market
Everyone knows that getting successful in any activity requires experience and understanding properly the fundamentals. That is also valid for forex market. To trade successfully on forex, you have to learn and do it continuously. You risk your own savings and learning from your own mistakes is not an option at all. You have to act carefully and accurately.
Experienced brokers in the forex market propose the beginners to start with training demo accounts and in this manner get basic knowledge and most important - experience. A demo account can provide a real and trade related atmosphere. The best thing about these accounts is that you put at risk only your virtual money but get real experience, so if you are a newcomer in the forex market, give it a try!
2- Expectations based on nothing
Stop constantly believe in something that can be quickly and easily make a fortune! There is no doubt about the fact that some people actually get rich quickly and decently earned on forex, but this is not done in a couple of days. Getting special trading experience can take whole years. If you made a decision to manage successful deals and not lose your capital in the first month, learn constantly to increase your capital. And this comes with experience!
3- There is no trading plan
Having a good plan will put limits to your emotions and possible options. When there is a defined algorithm and set of actions, it is much easier to do business and anticipate some positive results.
The plan should also include all the aspects of your trading, like the trading instruments, meaning the currency pairs that you choose, the time frame, and the real profit that you would like to get.
For example, you need to know in advance at what level you will close your position and will be able to pick up your income (take-profit order) or put a limit order when there is an unsuccessful transaction.
4- Lack of discipline
The trading plan has sense only if you have patience and discipline to follow it. Although it may be difficult, it is necessary if you want to become successful. Every time when there is a currency movement in the market, you can be tempted to give up your initial plan or strategy. However, if you will be perseverant and will control your emotions, getting successful will be just a matter of time.
5- Lack of knowledge about using take-profit and stop loss
Let us assume that you have an order and just leave it open while going through the market without even knowing when to close the deal – there is the risk of losing your trading account. That is why it is necessary to add an order to limit the loss of the open positions.
6- A large number of open positions
This is a mockery of your own capital, in the truest sense of the word. You will have to deal with too much information that you don’t have time to perceive and more than that – to control. Later, it can break you!
7- Long maintaining of unprofitable and no longer relevant positions
The difference between the educated forex trader and the beginner is that the first one can immediately determine when the position of the losing trade is no longer changing. An experienced trader has no illusions and hopes that things will change for better. He just simply accepts losses and ends a particular trade. Well, the beginners generally do the opposite.
8- Greed – it’s bad!
#go300x250-5risk#This is the actual characteristic that can confuse you and lead you to stupid and unreasonable actions. There are some examples of individuals who double their stake in the forex market, even if everything is set up against them. This is because of greed and emotions.
9- Trading with unfamiliar or little known up to this point trading instruments
This point is quite similar with lack of experience. Many beginners are tempted to start new instruments right away, without research, only because they think these are much better and profitable than the current ones. It may be so, if you consider certain strategies, but you should do research and get experience with each trading instrument apart.
10- Ignoring changes in the spread and the impact of spread on the profit
The spread refers to the difference between ask and bid price. It has a great importance and a direct impact on the profitability of the trade. You need to understand that the spread on currency pairs varies widely throughout the day – sometimes turning the profitable trade into unprofitable.
The forex market does not forgive anyone! Whether you are a beginner or a professional, a momentary weakness will instantly lead to punishment. The experience will help you to make the right decisions but you should stay focused on one path because the market is constantly changing and that is how your experience should be, an experience of changes and their anticipations.