How to avoid the most common mistakes in trading

Rate this Entry
The forex market is a huge market and every single day more than 4 trillion USD is traded. Nowadays normal people like us can also participate in this huge market due to advancement in technology. The retail traders now have the liberty to use high leverage trading account which allows them to place high lot size trade with a small trading capital. But making profit consistently in this industry is not at all easy rather it is considered to be one of the toughest tasks in the world. If you go through the statistics then you will find that out only 5 percent of the traders are making a consistent profit. So why the number of a successful trader is so low in the financial world. The expert traders in the United Kingdom believe that most of the retail traders fail due to their lack of trading knowledge and discipline. Today we will discuss how to avoid the most common mistakes in forex trading.

Executing too many traders: This is also often known as over trading. The retail traders in the financial industry tend to trade every possible trade setups regardless of the quality. For this very reason, they find it extremely difficult to make a consistent profit. The expert traders at Saxo always suggest the new traders look for quality trade signals. As a currency trader, you main aim should be on high-quality trade execution.

Risking too much in single trade: The new traders often risk a huge amount of their trading capital in a single trade. They simply think that this is a lifetime opportunity by seeing a reliable trade setup and thus execute high lot size trade. But the financial market will be always there. You need to stay in the game in order to make a profit. Risking anything more than2 percent is often considered to be as aggressive trading by the experts. So always make sure to follow proper money management in plan and never risk any amount which you are not comfortable in losing.

Trading the lower time frame: The forex market can be traded in a much different time frame. The novice traders tend to do their technical analysis in the lower time frame since it gives them high-frequency trade signals. But when you trade the lower time frame keep in mind that you are trading the minor support and resistance level. In order to execute the best possible trade in the online trading account, you always need to trade the key levels of certain assets.

Trading against the trend: Trading against the trend is very common among the novice traders. But the expert traders at Saxo always suggest following the existing trend to reduce the associated risk in trading. Always try to find the long term existing trend and find a quality trade setup which goes in favor of the trend. You also need to learn the art of fundamental analysis since it will help you to gauge the strength of the trend for a certain asset.

Avoid Indicators: Indicators are nothing but the waste of time. As a professional trader, you need to learn the perfect way to trade the key support and resistance level without the help of any indicators. Try to learn the highly reliable candlestick pattern since it will give you price action confirmation signal to place your trade with proper money management plan. Compared to other trading strategies this system tends to give the best possible opportunity to make money in the online trading community. However, you can use indicators but they should be your helping tools. Never place any trades based on the indicators reading only.
Tags: None Add / Edit Tags