It is quite important in trading the Forex market to know what not to do as well as what to do. Below there are some errors that new Forex traders make and how to avoid them.
– Trade without a plan
If you enter the Forex market and have not thought out not just your entry point, but as well your exit point and how much you are risking on that trade, you will surely fail. You will be second guessing not just your decision to enter the trade to start with, but as well how long you have to stay in a particular trade. Without trading plan you will surely let your emotions come into trading.
– Do not think about money management
It is important that you know the amount of equity you have in your trading account and the percentage of that equity you will risk on each trade. It is recommended to risk no more than 1 per cent per trade. Later you could determine where you will set your stop loss in order to agree with that amount of risked capital.
– Do not take into account recent market behavior
It is necessary for you to do some basic analysis of where the Forex market has been going in the recent past and its current volatility. If you fail to do so, you will have good chances to enter a trade in a wrong direction or worse getting the proper direction, but setting your stop loss too close to the market and getting taken out of the trade before it actually can put you into profit.
– Do not worry about when you are trading
It takes a little research on the hourly charts to determine the times of day that the various Forex currency pairs tend to move. In fact, there are three main trading sessions during a day and times during those various market periods when the market is stalled or moving quickly. It is necessary for you to be familiar with those times so that you can enter the market or stay out till the trading picks up.
– Do not pay attention to the daily trading range
While making decision to enter a trade on any currency pair, it is necessary for you to determine the average daily range of that currency first. If you do not have that insight, it will be quite easy for you to not give your trade an adequate amount of space for the normal daily noise that the market trades in and you have a risk if getting stopped out prematurely on a god trade.
If you manage to make these mistakes in your Forex trading, you will surely lose your trading account in relatively short period of time. But, if you manage to avoid them, you will trade the Forex market quite successfully.
As in any other sphere of life foreign exchange market needs some education.
That does not mean that after reading even the top materials you will start closing trading positions with huge income, but this knowledge will save you from many traps. And even if you make up your mind to get the help of a managed forex trading service, still you will make a much wiser decision.
And a final piece of advice – today the web technologies give you a truly unique chance to choose exactly what you require at the best terms which are available on the market. Strange, but most of the people don’t use this chance. In real practice it means that you must use all the tools of today to get the info that you need.
Search Google and other search engines. Visit social networks and have a look on the accounts that are relevant to your topic. Go to the niche forums and participate in the discussion. All this will help you to create a true vision of this market. Thus, giving you a real chance to make a smart and nicely balanced decision.
P.S. And also sign up to the RSS on this blog, because we will do the best to keep this blog tuned up to the day with new publications about Forex currency trading.