Currency Trading Pitfalls – How to Avoid the Top 5 Mistakes in Forex Trading

1. Over Leverage

This is a one of the most common mistakes
committed by forex traders, especially those who are relatively new to
trade the forex financial market. If you can only afford $5000, do not
trade $10,000. Trade what you can afford to lose. Do not put all your
entire savings at risk. Just like any business, losses will happen, but
you need to control your risks and protect your capital.

2. Over Confidence

Don’t
ever forget that the forex market is smarter than you. So don’t ever
think you can look into a crystal ball and see where it’s going to
happen. Otherwise, your capital will be wiped out pretty quickly and
your confidence level adversely affected. You will need to do your
homework, study the market trends to understand what the market is
doing. Some good forex indicators will tell you what the forex
financial market is up to. Get a good simple forex trading system that
works and follow it closely. Do not ever try to outsmart the market by
acting before your forex trading signals tells you to.

3. Over Attach To The Trade

If
you have entered a forex trade and is losing you money, get out of it.
This is another common mistake of people trading as they become
attached to the trade or think it will eventually turn around. If it’s
losing, it’s a loser. The best way to do this is to set a stop loss for
every trade you enter. If you’re wrong in the trade and got taken out
by the stop loss, just move on and focus on the next currency trade.

4. Over Bid

Another
major mistake some forex traders make is to chase the price. They
entered the market after the currency pair has already made large moves
and is prone to price correction. There is no place in the forex
trading market for emotional traders. If you allow your emotions to
dictate your trading, you’ll end up with an empty account. Getting
emotional is something you want to avoid at all costs. If the price is
unfavorable, do not trade but wait for the next opportunity. Remember,
good traders control risk, inexperienced traders chase gains.

5. Over To You, Coach

The
most successful forex traders usually find themselves a good coach or
mentor. This can be a friend who has been trading forex for quite some
time or a forex trader who is willing to share his knowledge and
experience. Learn as much as you can from him. Study his forex trading
guide and learn how he trade the forex. Do demo trading on the forex
trading strategies taught to test it out. And don’t hesitate to ask him
questions.

Forex trading is a long term business and you need to
spend time and effort to master it. Successful traders are those who
are patient with the market and themselves. Remember, only serious
traders can make serious money. Are you serious enough to trade
profitably?


If you’re serious to learn how to trade forex successfully using a
simple, time-tested and proven forex trading system, download my FREE
56-page “Forex Trading To Riches” ebook at http://www.forextradingpower.com.

The author, Daniel S, is the owner of http://www.ForexTradingPower.com
where you can get free premium forex trading tips and resources. Daniel
S. specializes in teaching real people how to trade the Forex market
for long term financial success.

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