As a trader, making mistakes is inevitable, it is part of your learning curve in the market. However, if you keep making the same mistakes over and over again, it means that you are not really learning and end up making no progress on your trading journey.
Well, before you officially start trading, it is important that you understand a few of the mistakes that you often make in your day-to-day trading so that you can avoid them as much as possible.
1. Frequent trading
Trading too often is a very easy mistake for beginners to make, most people are afraid of missing out on opportunities and are born with the urge to chase profits. In front of the crazy profits, people will forget about the risks and choose the profits, that's why they trade too often.
Due to the fear of missing the market, for example, after doing more, the market rose, the results did not take long for the market to fall, triggering the stop loss. At this time, the human heart is always thinking about continuing to go in more. If the market continues to rise, the psychological special itch, want to be afraid of missing this wave of rise, and so on.
Suggestions: 90% in the foreign exchange market is oscillating, the reason why most people can not control the frequent trading, the root cause is that there is no clear trading rules, or trading rules, but fuzzy, not enough refinement.
Therefore, the easiest way to avoid frequent trading is to suggest a complete trading strategy. If you do not strictly follow the plan and time you have set for trading, you will be trading too much and thus incurring unnecessary losses. Such an approach can only be achieved through self-discipline.
2. Lack of patience
Some investors hope that as soon as they enter the market, the price will move in their favour, preferably dramatically, and that they will be able to make a fortune overnight. But the probability of this happening is very small, most of the time after entering the market, the market seems to be against their own as if, preferring to move in the opposite direction of their own.
This is the test of investor endurance, must be strictly in accordance with the original operating plan to act, do not get the sesame lost watermelon, see other varieties of good, immediately change positions, or earn a small profit on the fly hastily thrown out, often will not pay for the loss.
Recommendation: Strictly follow your own trading strategy, don't trade for the sake of trading, or trade for the sake of seeking change, be patient and wait for great trading opportunities to arrive, then act prudently and take advantage of the opportunity to make a profit. The market is the market, no one can replace the market or force the market.
3. Counter-trend operation, guessing the top and measuring the bottom
It is human nature to buy low and sell high or sell high and sell low, but unfortunately, the Forex market proves that this is not at all a profitable tool. Investors attempting to find tops and bottoms often move against the trend, making the act of buying high and selling low a harmful habit.
Meanwhile, in a trending market, the practice that is most likely to get investors into trouble is aggressive counter-trend operations. Many investors in the wrong direction, but also against the trend to increase, waiting for a pullback to recover the capital. But when the price retracement, they began to hope that the market can turn, so that they pick up a "pie in the sky" opportunity.
In addition, many trading novices like to open a reverse position in the stop, although sometimes good luck can be lucky to profit, but this is a very dangerous action, is a serious counter-trend behaviour, once encountered in a continuous unilateral market will be hard to close the position, or even burst the position.
Suggestion: learn to be a friend of the trend and catch it correctly. While you can try to catch short-term price fluctuations or price adjustments, you can actually make larger, more regular profits if you follow long-term price movements and sell or buy in the direction of the trend. Keep an eye on global price movements over a long period of time and only trade publicly for a very small period of time.
4, carry a single transaction, do not set a stop loss.
In foreign exchange trading, single into the field, the market has gone the opposite, proving that he did wrong, but the inner stubbornness and luckiness but let himself deliberately carry a single, always hope that the market can still give themselves the opportunity to preserve the capital or even profit. But many times, the market is often contrary to expectations, to be a big mistake, the loss has been very big. At this time, the huge loss and let himself more reluctant to cut the position out of the game.
Suggestions: Forex trading must set up a good stop loss, if the market is the end of the consolidation you enter the market does not set up a stop loss, once later the general trend of the market and the direction of your position in the opposite direction, the burst will happen. Therefore, the courage to admit their own mistakes, abandon the fluke, stop loss in the first time.
Learning how to stop loss correctly can can improve your trading very quickly as it means you can trade more in the market. Many inexperienced traders will set their stop loss too close to the entry price because they want to trade bigger positions, this is a mistake caused by your greed. If traders are able to properly set their trading stops based on price behaviour and market structure, then their trading is going to be much smoother.
5. Heavy trading
More than frequent trading reflects the greed of the human heart a way of operation is heavy trading, always thinking that by a transaction can make a fortune. However, the risk of heavy trading is very high, because the increase in the position leads to their own foreign exchange transactions require an increase in the margin, the amount of funds remaining in the whole account to reduce the amount of risk that can be borne fluctuations in the exchange rate is reduced, once the exchange rate fluctuations in a relatively large number of triggered by the burst position.
Recommendation: If you want to stay in the forex trading market for a long time, survival is always the first place, so position management (or money management) is very important. For example, must strictly control the proportion of open positions, never full position, each time the open position should not exceed the total funds of 10%, to prevent the occurrence of replenishment.
Many stable and profitable traders have shared similar views, light positions and stop-loss as the core of Forex money management, but also the trader's entire risk control plan is the most important.