‘To err is human’ – such were the words of a classic.
And I have to agree. Everyone makes mistakes. There is no person on Earth who had never made a mistake at a cost. And forex traders are no exception and maybe even the confirmation for the statement.
Why do we make so many mistakes? Well, because there is a very low entry bar into the forex trading. That means that virtually anyone can roll into the markets no matter the experience level and the goals set in front of them.
And the thing is that forex market has so many traders inside, that your personal failure will do absolutely no damage. It will even be stronger, as the more money is poured into a certain asset, the better it is for the asset itself, right? That is one of the laws of forex after all. And if the market is not going to support us, we have to support ourselves. And that means that we have to keep an open eye to the mistakes that awe can be making every single day.
First of all, it is quite common for traders to put down trades with low win rate and reward-risk ration. Those two are of the paramount importance to your success as trader as there is no denying or discussing it. and while I understand that for the beginners it might be the best decision so that no to risk everything, for experienced traders that is a pure mistake.
Second most common mistake is thinking that pouring more money into a losing trade and waiting for some time is not only going to bring what you lost back, but also is going to help you make profits. But that is not true at all. just think about it – you are not only not going out of the losing trade, but you are actually telling it to eat even more of your money. Horrible mistake.
That brings me to the fail number three – not assessing the risks and fail at a risk management. That is number-one knowledge for a trader – knowing your limits and understanding you risks before you even consider forex. But yet, some of us are still drawn by the promises of luxurious life and thus we fall victims to the pretty picture. Knowing risks and not giving into the risk hunger is a type of self-control that traders ought to have.
Choosing a broker if also an essential part of a success but a lot of traders make a simple mistake of not checking out the broker before trusting them with their money. It is very important to know whether the broker is going to be good for you personally and not trust anyone’s words here. Your broker must be good for you.
Also, do not overload with trades. Here the quantity-quality rule works like nowhere else in the world. More trades will not guarantee more money won. In the end it will actually play against you as you are not going to have enough of an attention span to hold onto every trade. I assure you – there will be no wins... well, at least no massive ones.
But one of the most massive and common mistake is the one of trading without a plan and without the rule-cook. Of course you can make up your own rules, that is encouraged, but remember that you are going to be the one who is going to have to adjust these rules to the markets, not the other way around. Markets have been here long before us and we have to respect their rules.
Even with knowing all of this we are still gain to make mistakes, but in the end there is nothing else as effective as learning on your own mistakes.