Forex trading is as old as man. It deals with buying and selling of currencies, stocks, etc. the key to making money trading the forex market depends on your level of accuracy implementing a high probability strategy without emotionally disrupting your exit plan. Many people have gotten into trading forex with the wrong mind-set and ended up going bankrupt. Let the truth be told, making money trading forex is much more than placing a trade but also depends on how sound you are emotionally.
In this article, I have itemized common mistakes people make that makes them end up as losers in the market. What I have written is from my experience starting out as a forex trader.
- Trading with the Money you can’t afford to lose: – we trade the forex market to make money no to lose it. For that purpose, trading the market with your only cash or a sum you can’t afford to lose is risky. When you trade with such money, it naturally gives birth to emotionally induced decisions, which in most cases are detrimental. The bottom line is, trade only with money you can afford to lose.
- Trading without a strategy: – it is impossible to have a 100% winning trades; however, placing trades with a strategy that puts the odds in your favour is crucial. You can’t make money by haphazardly placing trades without a plan. There are a lot of trading strategies with high probability of winning, so check them out and try them on a demo account before carefully implementing them.
- Placing trades without predetermining your exit plan: – Placing trades is easy, but knowing when to exit is difficult for most traders. Your purpose of trading is to make money, and with that in mind, protecting your capital is important. Whenever you place trades without predetermined exit, it implies you are taking uncalculated risk. Risk comes when you don’t know what you are doing. So before you place a trade, determine the position of your stop loss and take profit.
- Not using Stop Loss/Take Profit: – some people believe that using stop loss is a bad strategy, but believe me, it isn’t. In fact, it is vital as it helps protect your capital from being wiped out. If you want to last long enough in the market to make a profit, then imbibe the habit of using a stop loss. Using take profit, on the other hand, helps you make money. Some people prefer placing trades without a take profit target. In such cases, they might end up losing the whole profit and hit a loss.
- Greed: – is a killer. If you can tackle this issue, then you will for sure go far making a lot of money trading. Greed will always make you lose money in the market. Never move your take profit because you think the market will move in your favour some more. If you are fund of trying hard to exhaust every move in the market, then you are under the influence of greed.
- Trading too much: – trading too much is a bad practice and can make you blow out your account. So to avoid that, get a high probability strategy. With a strategy like price action, you can hardly over trade your account.
- Thinking it’s easy to make money trading forex (it is not a get rich quick scheme).