There are many identifiable mistakes in the Forex trading business. A lot of experts in the trade have no problem identifying and pointing out these mistakes. Beginners, however, have a hard time even recognizing the slightest mistakes.
Regardless of the level you are in the trade, you need a proper information manual that can guide you through the process. This is why the Masters of Trading webinar remains a key reference for a lot of traders. Even though there are various tips you can get on how to avoid mistakes, only a few are necessary to give you confidence.
Here are the top 7 trading mistakes to avoid:
1. Depending on luck
A lot of people tend to have too much reliance on sheer luck when Forex trading. This is possibly due to misinformation. Many times, the concept of probability is cited as the overriding principle in Forex trading.
This tends to mislead a lot of people who end up overestimating and relying heavily on luck. Depending on luck is a mistake which you should avoid if you are to be successful in the trade.
2. Overanalyzing the profit and loss margins
It is definitely a great thing to keep track of your business journey. You should however not put too much emphasis on short-term profits or losses. This is mainly due to the volatile nature of the business. One or two losses will definitely be part of your journey but you should not use them to determine the overall journey. The most important thing should be to keep records which you can refer to in future.
3. Failure to keep vivid records
Records are very important in business. In forex trading, vivid records are particularly crucial. Forex trading is usually a long-term business that relies on short-term records for the most part. Even though long-term data is mostly used in the Forex analysis itself, personal day-to-day data on successes and milestones is what helps most traders.
The failure to record your short-term milestones vividly is thus a huge mistake you should avoid in 2018.
4. Reading too much from trending news
There is no business that does not depend on the daily news. For the forex market, the news of the day can particularly have a significant bearing on business. In fact, the most astute traders make a habit of keeping track of news through feeds and market bots. This does not mean that the news is of terrific significance, however.
News tends to mislead many beginners in the forex trade but also experienced ones. You should avoid putting too much emphasis on what is happening and instead focus on your predetermined strategies.
5. Going for the trade that appears to be the easiest
There are some assets in the market that are quite misleading. These assets appear to be cheap and easy trades that anyone can buy into. Such trades tend to throw off so many traders because they do not always end up converting into profits.
As a general rule, you should always invest in areas that you have personally established. You should have a list of currencies that you are familiar with and which you have decided should be your targets no matter the situation in the market.
6. Holding on to loss-making trades for too long
While it is best to identify a currency pair that you are most comfortable with, it does not mean that you should continue holding on to it even after it has proven to be a disaster for your goals.
Once an asset becomes too unpredictable, you should drop it and pick up other trades that might have better prospects for you. The Forex market is so dynamic and you should be versatile in your trades when necessary.
7. Being led by emotion
Finally, there is nothing that invokes passion like money. Investments, business, and trade are all subjects that are viewed with a lot of passion because money is involved. The Forex market is the epitome of this passion since investors deal directly with investments in the form of money.
While you can have some sentiments over your investments, you should not allow irrational feelings to totally guide you in business. Being overly invested emotionally is thus a mistake you should avoid in 2018.