Leading your dream life is not easy. You might have the best education from a top class university but there is no assurance you will get a decent job. In fact, the job market is getting too competitive over a period of time. Due to this, people often prefer to become currency traders. Being a currency trader, you can be your boss and control the profit factors with an extreme level of ease. But things are not as easy as they seem. In fact, more than 95% of Forex traders are losing money on a regular basis. So, how do you become successful at trading? You need to avoid the most common mistakes and trade the market with proper logic.
Let’s discuss the most common mistakes committed by rookie traders and find the solution to those problems.
High-frequency trade execution
High-frequency trade execution is often referred to as overtrading the market. Most of the retail traders fail to control their emotions and end up executing too many trades. They simply think this is the only way to make more money. But in reality, this is the easiest way to lose your entire investment. As a Forex trader, you need to understand the importance of quality trade execution. You can’t make a profit in the long run unless gain control over your emotions. Instead of trading, the market in the lower time frame tries to become a position trader. This will reduce the number of trades you execute per day.
Trading with high risk
You might have the best trading account at Saxo but still, you should never trade the market with high risk. Taking a huge risk in each trade is nothing but a suicide mission. You might be able to make some big profit from certain winners but considering the long term goals, you are going to be on the losing sides. No matter how well the trade setup is, you should never risk more than 2% of your account balance in any single trade. Try to follow the conservative trading technique since it will protect your trading capital in the long run. Being a currency trader, always remember to follow proper money management. Losing trades are nothing but a part of this profession. Learn to embrace the losing trades and it will help you to make a better decision.
Trading the high impact news
News trading is only for experienced professionals. You might have 2-3 years of experience in the trading profession but this doesn’t mean you will be trading the major news. Dealing with the high impact news is more like catching a falling knife. It takes years of practice and a complete understanding of the fundamental factors. At the initial stage, you need to look for quality trade setup when the market is stable. Stay away from the market when the market exhibits wild swings or random movement.
Trading with indicators
Indicators based trading strategy is never going to make you rich. You need to understand the fact, trading is all about finding the best trades at the complex condition. To do so, you must focus on the raw price data. Those who knew to the market might not even know there are two major forms of indicators. The first one is the leading indicator and the second one is a lagging indicator. So, it’s very obvious you will never get real-time trade signals based on the indicator readings. Avoid indicators when you look for quality trade setups.
Making mistakes in the Forex market is very common but if you fail to learn from your mistakes, you should never trade the market. You need to fine-tune your trading strategy on a regular basis. Identify the weakness in your strategy and trade the market with low-risk exposure. Execute your trade once you get a proper confirmation in the higher time frame.