Get aware about danger zone of forex trading Here, I am going to discuss about the common mistakes that traders do, especially the novice traders! There are the some blunders which hinder you to stay long on the forex trading platform as unawareness and lack of knowledge towards it can make you bankrupt. Over trading and trading under capitalism, the two most dangerous mistakes that can spoil your trading plan very badly. Some common mistakes are: Trading against your account volume Trade under capitalization leads to losses for sure, if you are having insufficient balance in your account. Never ever invest your whole amount in a single trade. Beginners, due to lack of knowledge, usually invest their whole money in the first week or within first or two months of trading. Make yourself concerned about having a backup plan to protect you, if you lose at any point of time. Overtrading Beginners take too many trades at a time in the hope of gaining more profit without even considering the market conditions. This can, at times, put you in big trouble, so it’s better to avoid this mistake. Your valuable money should be used to earn money, not to waste in silly mistakes. Over leveraging Leveraging proves good enough in forex trading to control high investments in order to gain significant profits but over leveraging may give high risks to your account This is an another mistake which can wipe you out from the forex world. Hold on wrong decisions If trading going in the wrong direction, then it’s better to set ‘stop loss’ instead of holding long on the same trade in the expectation that the market would favor you after some time. To avoid money management This is one of the worst mistakes among all. Fear and greed are in human nature, both exploiting the money management technique. This comes into play when you want to earn more or when your trading goes in profits and you usually forget to fix stop points. Your desire to earn more and more and this greediness puts you in trouble while trading. While there are also times when you fear and panic over the thought of losing money and ultimately land up selling your trades at the wrong time!
To ignore spreads It is advisable to take cautions and choose a reliable Forex broker through inspections since most of the brokers make money from the Bid-Ask spread. They offer poor quality execution of your trades by requoting the deal and hence making a great difference in profit, keeping you in a difficult situation. Reasons behind this mistake: *
Insufficient knowledge towards market trends
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Unawareness towards risk management
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Lack of knowledge towards money management
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Inexperience
A solution to avoid this mistake: Remember that insufficient knowledge can kill you in forex trading so it is highly recommended for you to update yourself with each ‘ups and downs’ of market trends. Take suggestions from experienced traders and plan your trading techniques to gain a better investment return. Success here lies in learning from the experience; let it be a profitable one or an unhealthy trade. Once you aware about these mistakes, you would definitely try to avoid it which can help you a lot to succeed in forex trading.