10 Forex Trading Mistakes to Avoid - Part 2

In the previous part, we discussed the psychological (or attitude-related) mistakes that should be avoided in Forex trading. However, there are other types of errors, distinctly technical, that can lead to disaster even more quickly. Here is a list of things NOT to do from a technical point of view. Relying too much on software. Among the most widespread advertising content, those that praise the capabilities of automated trading software stand out. Just install a software, briefly set up the program, and wait for profits in complete peace. As we have already specified in the first part, there are no free lunches. It is impossible, therefore, to think that there is a software that, regardless of its cost, essentially generates money out of thin air. Of course, the usefulness of "robots" is not an urban legend, but it depends on the robots. The real ones, capable of representing a resource for traders, require the mind and interpretative skills of humans. They do not generate money out of nothing, but rather from the trader's ability to plan, draft a strategy, etc. The same goes for signals, which among other things are often generated automatically. You should not blindly rely on them but at least verify them. Or better, use them to verify your own theses, your own strategy. Neglecting technical analysis. If Forex trading is an "intellectual" activity, which requires a considerable expenditure of mental resources, then it makes no sense to neglect technical analysis. Although it cannot be defined as a science, but only a discipline, it is an invaluable reference for all traders. It allows understanding which phase the market is in, provides statistical models to predict price trends. So, why not use it? Neglecting fundamental analysis. This mistake is often made even by experts. The issue often takes on ideological contours. According to some, technical analysis is enough; everything you need to know is already in the charts. This is a wrong thought, a sign of a lack of open-mindedness. Fundamental analysis is as important as technical analysis, and the practice of both disciplines must go hand in hand. Incidentally, fundamental analysis is the discipline that allows, after careful study of the economic and political environment, to predict price movements. Neglecting it means believing that the market is a closed environment, a false proposition by definition. Getting the timing wrong. This is one of the most common and at the same time one of the most insidious errors. The problem is that getting the timing wrong is easy, and often you don't even realize it until it's too late. It is therefore important to evaluate entry points and exit points with the utmost possible precision. In this, technical analysis comes to the rescue. Overexposure. It can happen that a trader sees an opportunity on the horizon. They put the currency under the magnifying glass of technical analysis and fundamental analysis. They verify its goodness, anticipate the gains, and finally invest. Nothing strange, except for one simple fact: very often the euphoria of having discovered the classic "gold vein in the mine" is followed by an imprudent attitude. In short, an overexposure. The trader who overexposes himself, perhaps deviating from his money management plan, is like that poker player who, convinced of winning, places an all-in. Not exactly a noble example for a trader. Incidentally, overexposure is always serious or risky. It is even more so, however, if leveraged products are traded. In that case, the losses can be extreme. Read also: 10 Things You Should NOT Do in Forex Trading - Part 1