6 Deadly Forex Trading Mistakes to Avoid
February 28, 2017
Forex trading is a complicated activity that exposes users to various risks, despite the message that brokers often convey through their advertising campaigns. It is obviously an activity capable of providing a lot of satisfaction and guaranteeing economic results. However, this is provided that certain mistakes are avoided. Here are the most serious and frequent ones.
Overanalysis
Serious traders practice technical analysis and fundamental analysis. However, excess should be banned, even if it concerns virtuous practices. In particular, if you overdo the analysis, you expose yourself to the risk of "paralysis". You dwell too much on the details, search for evidence and counterevidence, and in the meantime, opportunities fade away. Wasting your time in Forex, as in life, is equivalent to wasting money.
Overtrading
Most traders place too many trades, thus using an approach that focuses on the very short term. Nothing strange, except that this strategy is probably the most difficult to implement. Paradoxically, producing long-term analysis is easier than producing very short-term analysis. The decisive factor, in this case, is volatility, often out of control if the field of investigation is excessively restricted. Another factor that favors this attitude is euphoria: if the trader seeks adrenaline-pumping sensations, they risk going into "overtrading" and complicating their life.
Ignoring Money Management
It is a common mistake, although mostly made by beginners. Money management is the practice that allows effective capital management and risk control. The trader must know at all times how much they risk losing. Above all, they must decide how much they are willing to lose and trade based on that decision. The risk is navigating by sight, making mistakes, or stopping too late.
Not Studying
It is the typical mistake of beginners. Without studying, therefore without a training path behind them, the trader is overwhelmed by the complexity of the market, by the difficulties they will inevitably find in using the platform. In plain words, they find themselves... Unarmed.
Succumbing to Emotions
Emotions are the number one enemies of the trader: they compromise decision-making skills, detract from lucidity, and make everything more difficult. The advice is to stop when you realize you have a troubled state of mind or to postpone trading with real money.
Not Practicing with Demos
Beginners must focus on theory but also on practice. Demo accounts are a very useful tool, capable of completing the trader's training.
