Generally a lot of people involve in foreign exchange market, but all do not earn profits. Some of them lose whole money and some of them succeeded. Why some people fail is because of doing mistakes. Doing mistakes is the main cause for trading loss or failure. There are few common mistakes which are done by traders, such as:
- Executing trade with out having a trading plan is the main mistake which is done by traders. If he trader enter the trade with out a specific plan of action, they does not know when or where he or she will exit the trade and how much money can be made or lost.
- Another mistake is trading with inadequate assets or improper money management. Investing too much money at once and investing insufficient money in capital market, both are mistakes.
- Having high and too fast expectations are the mistakes. Generally beginners who enter the trading have high expectations and they get disappointed about trading. Generally a doctor or lawyer do not get success with in couple of years of practice. It takes time to get success. In the same way it takes hard work and time to get success in trading.
- Protective stops or sell stops helps the trader to provide good idea about how much money he or she is risking on a particular trade. Many traders fail to use protective stops.
- Having no patience and discipline is the main mistakes of the traders. These two virtues work very well.
- Other mistake is trading against trend. That means trading to pick tops and bottoms in markets. Generally it is a human nature to buy at lower price and sell it at higher price. But it may not be profitable in trading.
- Sitting on a losing position for a long time is other mistake. Successful traders do not sit on losing position for long time. They set a protective stop, if it is hit, they will take losses and move to other setup of potential trading. Unsuccessful trader sits on losing trade and they hope that market will soon turn into their favor.
- Trading in too many markets at one time is another mistake.
- Traders mostly do not take responsibility for their actions in trading. They blame their broker and someone else.
- Other mistake is not getting a bigger picture perspective on the market. Some traders look at daily bar chart and get a shorter thought or knowledge on market trend. Looking longer-term weekly or monthly chart for the same market can help trader to have different thoughts on market.
- Forex education is very important for a trader to trade successfully. Traders who do not have knowledge about forex, will have no proper idea about the market and tend to make many mistakes.
These are the common mistakes which are done by many traders. If you avoid these mistakes you will be the successful trader.