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No matter how different you think your trading style is, the simple truth is that most Forex traders commit similar trading mistakes no matter how experienced they are or what their style of trading is like. This article outlines the most commonly made trading mistakes and why they should be avoided.
Currency Trading Mistake One – Using Indicators and Fancy Tools
A lot of Forex traders, particularly those who are just starting, tend to wrongly believe that they need to use indicators to understand Forex price movement completely or that these indicators will enable them to become more profitable in some or other way. While this might be true to some extent, many traders then concentrate entirely on indicators instead of the price action that these indicators are derived from. Indicators offer no real advantage over learning to read a “naked”price chart and can inhibit your progress as a trader if you do not have the basics behind you so focus on that instead.
Currency Trading Mistake Two – Not Understanding and Implementing Risk/Reward Fully
Every single professional trader fully understands the power of risk reward and how to use it in each and every trade they take. While beginner traders understand the importance of ensuring that their winnings are bigger than their losing trades, they rarely know how to implement this in real world trading. Most traders get caught up when they lose two or three trades in a row as they do not grasp the full implications and when to apply risk reward formuals and ratios that take more time to play out. There are numerous articles on the web which can help you avoid this mistake, research is always your best solution.
Currency Trading Mistake Three – Going Into Forex Trading Without a Trading Plan
A lot of new traders fall short because they do not have a trading plan or system that is functional, and they also have the misconception that having one isn’t all that necessary. Currency trading needs to be treated like any other business, and in the same way that having a business plan is critical for the growth and prosperity of any business. It helps you stay focused and on track when things go wrong, preventing you from falling off the wagon. Instead of focusing on immediate gains and losses, the Forex market is seen as a long term business where small losses could be offset by major gains later on.
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