Professional traders have not become so successful within a night. They have faced thousands of challenges and have made many trading mistakes. Instead of getting frustrated, they fought back in their early days and learned from those mistakes to develop their business skills. Newbies make several mistakes and become depressed after losing a series of trades consecutively. It is a wise decision to learn from the trading mistakes in lieu of being frustrated.
Trading mistakes that Forex professionals always avoid
These are the common trading mistakes that professionals advise the newbies to avoid –
1. Choosing a short timeframe chart
Newbies always choose a short timeframe chart when entering in the trading market. They believe that it is very easy to earn money from a lower timeframe. Well, their belief is not wrong. Entering a trade and closing it within the same day is profitable, and these kinds of investors are called day traders. However, remember that there are greater risks in choosing a short timeframe chart. One can choose 1 hour or 4 hours timeframe, and it is called the lower timeframe chart. This kind of activity often leads to overtrading because you will tempt to enter more trades in a day.
Higher timeframes are comparatively safe, and in this timeframe, you will enter a trade and wait for days, weeks, or months. In a higher timeframe, there is more reflected data, and this timeframe carries greater weight. You can get a demo account and see the benefits of higher time frame trading. Find more info at Saxo and try to become a position trader.
2. Jump to trade without using a demo account
A demo account can play a significant role in developing an investor’s trading skills. This kind of mistake can lead you to a massive financial crisis. Using a demo account, you will realize how a trade market works, the resistance and support levels, the efficacy of your trading strategy, etc.
Professionals in Singapore always recommend the juniors to use a demo account before they jump into the real trades because a demo account can help an investor dealing with multiple situations. In addition to this, he can test the efficacy of his trading strategy and can enhance his business knowledge and experience. To test the effectiveness of a new trading strategy with different situations, there is no alternative to using a demo account.
3. Avoiding the trading strategy
Many newbie businessmen become overconfident when they notice that they have won a series of trades. This is a vital mistake that those overconfident businessmen make. They enter into the trades without taking any breaks, analysis, or following their trading strategy. Unless you modify your existing strategy, you should never neglect it. Overconfidence always leads those investors into a huge loss. If the market starts going against you, then the trading account will be ruined very quickly.
4. Avoiding the stop-loss limit
One of the common faults that newbies make is avoiding the stop-loss order. A stop-loss order always saves the investor’s money by automatically closing the trade when the market starts moving against you. For example, you have pre-defined the value that the trade will be closed if the market price falls below 10. When the market starts moving against your fortune and exceeds your pre-defined value “10”, the trade will be closed. This limit can save your trading account from being destroyed because of the sudden market crash. Newbies don’t feel it necessary to set value because they make decisions based on their feelings.
5. Focusing on the money and reward, not the process
When businessmen enter into a trade, they focus on the money only instead of the process. They believe that if the market favors their luck, they will earn a lot of profits from the trade. They don’t focus on their strategy or process. This kind of attitude is also a mistake that professional Forex traders avoid making.
These are the top five mistakes that professional Forex traders always avoid.