1) Knowledge Deficiency #8211; Most new FOREX traders don#8217;t even take the opportunity to learn what pushes currency rates (primarily fundamentals). When news or a statement is due out they need to close out their positions and sit out the best trading opportunities. They are edued to trade following the market calms down. So basically they overlook the entire movement and then trade the random sound that follows a fundamental price movement. Just think for a moment about technically trading that the aftermath of a price move; there's no potential.
2) Overtrading - trading frequently with tight stops and miniature profit targets will only make the broker rich. The desire to #8220;just#8221; make a couple of hundred dollars each day by locking in miniature profits whenever possible is a losing egy.
3) Over leveraged - Leverage is a two way street. The brokers would like you to use high leverage since that means more spread income since the standing size determines the total amount of spread earnings; the larger the position the more spread earnings the broker earns.
4) Determined by Others #8211; Real traders play a lone hand; they make their own decisions and don#8217;t rely upon other people to make their trading decisions to them; there's no halfway; either transaction on your own or have someone else trade to you.
5) Stop Losses #8211; Placing tight stop losses with retail brokers is a recipe for failure. When you put on a trade dedie to a fair stop loss limit that allows your transaction a fair chance to develop.
6) Demo Accounts #8211; Broker demo accounts are a shill game of types; they#8217;re not as time sensitive as actual accounts and so give the impression that time sensitive trading systems, for example short-term moving average crossovers can be constantly profitably traded; once you start dealing with real cash reality is quick to set in.
7) Trading During Off Hours #8211; Bank FX traders, traders traders, and hedge funds have a massive edge throughout hours; they can push the currencies around if no volume is experiencing and the end game is new traders gain fleeced attempting to exchange signals. There's just 1 signal during off hours #8211; remain out.
8) Trading a Currency, Not a Pair #8211; Being right about a currency is half a trade; failure or success is dependent upon being right about the next currency that makes up the pair.
9) No Trading Strategy - Make money isn't a trading program. A trading program is a blueprint for trading success; it spells out everything you see your edge as being; should you don#8217;t even have an edge, you don#8217;t even have a plan, and likely you#8217;ll wind up a statistic (a part of the 95 percent of new traders that lose and stop ).
10) Trading Against Prevailing Trend #8211; There is a massive difference between buying cheaply on the way down and buying cheaply. What was a minimal price quickly becomes a high price when you#8217;re trading against the trend.
11) Exiting Trades Poorly #8211; If you put to a trade and it#8217;s not working make sure you exit properly; don#8217;t compound the harm. If you#8217;re in a winning trade don#8217;t talk yourself from this position since you#8217;re exhausted or need to alleviate anxiety; stress is a natural part of trading; get use to it.
12) Trading Too Short-term #8211; If you#8217;re profit goal is less than 20 points don#8217;t do the trade; the spread you pay to enter the trade makes the odds way against you once you go for these tiny profits.
13) Picking Tops and Bottoms - Looking for bargains works nicely in the supermarket but not investing in foreign market; try to exchange in the direction the price is going and you#8217;re results will improve.
14) Being Too Smart #8211; The most successful traders I know are high school graduates. They keep it simple and don#8217;t seem beyond the obvious; their results are excellent.
15) Not Trading About News Time #8211; Most of those big moves occur around news time. The volume is high and the motions are actual; there is no better time to exchange fundamentally or technically than when news is released; this is when the real cash adjusts their rankings and consequently the prices changes signify serious currency flow (compared to silent times when Bank traders rule the market with their customer order flow.
16) Ignore Technical Condition #8211; Determining whether the market is over-extended long or over-extended short is an integral determinant of close time price action. Spike moves frequently occur when the market is one way.
17) Emotional trading #8211; When you don#8217;t pre-plan you#8217;re trades basically it#8217;s a consideration and not an idea; ideas are emotions and a very poor foundation for doing trades. Do people generally say smart things when they're upset and emotional; I don#8217;t think so.
18) Lack of Confidence #8211; Confidence only comes from successful trading. If you lose money early in your trading career #8217;s very hard to gain true confidence; the trick would be don#8217;t go off half-cocked; learn the business before you exchange.
19) Insufficient Courage to Take a Loss #8211; There is nothing macho or gutsy about riding a reduction, simply stupidity and cowardice. It takes guts to take your loss and wait for tomorrow to try again. Getting married to a lousy position ruins lots of traders. The thing to remember is that the market does crazy things frequently so don#8217;t get married to any 1 trade; it#8217;s just a transaction. 1 good trade won't cause you to a trading success; rather it#8217;s monthly and yearly functionality that defines a fantastic trader.
20) Not Focusing on the Trade at Hand #8211; there's no space for fantasizing in successful trading. Counting up and emotionally spending profits you harbor #8217;t made yet is mental masturbation and does you no good. Same with worrying about a reduction that hasn#8217;t happened yet. Concentrate on your standing and also have a sensible stop loss in place in the moment you do the transaction. Then be just like an astronaut #8211; sit back and revel in the ride; no sense stressing since you have no real control; the market will do what it needs to perform.
21) Interpreting FOREX News Incorrectly #8211; Fact is your media only has a very superficial understanding of the news they are reporting and tend to focus on a single component and miss the point. Learn to read the source documents and comprehend it for real.
22) Lucky or Good #8211; Your account balance varies don#8217;t even let you know the entire story about your trading; reality is if your taking a lot of risk and making cash you will eventually crash and burn. Look at the individual trade details; focus on your big loses and losing streaks. Ask yourself this; if I had a few consecutive losing stripes or a couple of consecutive enormous loses, how do my account balance seem. Generally, traders making money without big daily loses have the very best chance of sustaining positive functionality. The others are accidents waiting to happen.
23) Too Much Charity Trades #8211; When you earn money on a nicely thought out trade don#8217;t return half on a whim; invest your profits out of good trades on the next fantastic trade.
24) Courage Under Fire #8211; When a policeman breaks down the door to a drug retailers apartment he's scared but he does it anyway. When a fireman climbs onto the roof of a burning building he's scared but does this anyhow; and gets the job done. Same with trading; it#8217;s ok to be afraid but you need to pull the trigger; no activate #8211; no trades #8211; no profits #8211; no trader.
25) Quality Trading Time #8211; I propose 3 hours per day of quality, focused trading time; this #8217;s about all your mind allows. When your trading being 100% focused; half way is bullshit#8217; it doesn#8217;t operate. Don#8217;t actually think that time spent in the front of the computer watching the rates has any correlation to profitability; it doesn#8217;t. Spend less time but if your trading be 100% focused on trading.
26) Rationalizing #8211; Killer. Absolute Killer. Set your trade on and let it run. If it strikes your sensible pre-determined stop your out. Think about yourself as a prizefighter; you just got knocked out. Moving your stop is like getting up after being crushed using a knockout blow; it#8217;s moot; things will only get worse. Don#8217;t dismiss the apparent; your incorrect #8211; escape out. Come back the next day and try again. A little loss won't harm you; a astrophic reduction will.
27) Mixing Apples and Oranges #8211; Have you ever done this; you see that the EURUSD trading higher so you buy GBPUSD since it #8220;hasn#8217;t moved yet#8221;. That#8217;s a mistake. Most of the time that the reason the GBPUSD hasn#8217;t moved yet is since its overbought or some 4:30am UK news was bearish. Don#8217;t mix apples and oranges; if EURUSD seems bid buy EURUSD.
28) Avoiding the Hard Trades #8211; Bank FX traders possess an axiom; the harder the transaction would be to perform the better the transaction. This I heard from experience; when I needed to buy EURUSD and it was difficult to get them #8217;s as it#8217;so necessary to cover up and get the job. When it#8217;s easy to get them then sit back and wait for better levels. So if your trying to get into a trade or more importantly get from a trade don#8217;t putz around for a few points; get your business done.
29) Too Much Detail #8211; If your trading more than 2 indiors then you want to clean house. Trading is stifled by Possessing lots of indiors and finds reasons not to exchange. A setup and a trigger is all you want.
30) Giving Up Too Easy #8211; Your very first trade of the day might not be your best but surely it#8217;s no reason to stop. I have a preset daily trading limit and I use it; you can#8217;t make money by creating excuses; obtaining trades incorrect is And should be anticipated.
31) Jumping the Gun #8211; Don#8217;t be penny wise and dollar foolish; wait patiently for your commerce sign to be clear; place on your commerce and give it a decent size prevent loss so that you don#8217;t get pumped out by random noise. Do trades don#8217;t#8217; buy lottery tickets (extremely tight stops).
32) Afraid to Take a Loss - trading isn't personal; it#8217;s firm. Don#8217;t even think that a poor trade is a reflection on you personally. It could be your just ahead of your time or even a commercial order strikes the market and temporarily produces a small sudden move. Again, put your stop ahead and NEVER boost your pre-determined risk; in case it#8217;s going bad it will likely get worse; I think that#8217;s Einstein #8220;in motion remains in motion#8230;#8221;
33) Over-Relying on Risk Reward #8211; There's zero benefit in risk benefit; if you place a 20 point stop and a 60 point profit your odds are probably 3-1 that you will lose; actually with the disperse its like 4 to 1 (from entrance point if it goes down 17 points you lose or up 63 you triumph; 17/63 is near 4-1).
34) Trading for Wrong Reasons #8211; Since the EURUSD is going up isn't in itself a reason to buy. Buying EURUSD because its not moving so little risk is even worse; you8217;re paying the cost (spread) with no hint that you will find a directional movement. In case your bored don#8217;t commerce; why your bored is there is no trade to do in the first loion.
35) Rumors #8211; Rumors are rumors nearly 100 percent of time; think about where in the motion you heard the rumor; if EURUSD is up 50 points in past 15 minutes along with the rumor is dollar negative, well then you missed it. Whenever you trades decide where in the motion you're entering.
36) Trading Short Moving Average Crossovers #8211; This really is actually the currency sucker of the century. If the shorter term moving average cross the longer term moving average it simply suggests that the typical price in the brief term is equal to the average price in the longer term. For the life span of me I can't know why this is bullish or bearish. Simple to set up on appliions, complete with lights, whistles and bells, and great for the vendor getting thousands for your appliions but in terms of creating profit it#8217;s a zero.
37) Stochastic #8211; Another money sucker. Personally I believe that this indior is used backwards; when it first signals an overdone condition that#8217;s when I think the big spike in the #8220;overdone#8221; currency pair happens. To be overbought signifies strong and oversold signifies weak. Try buying on the first sign of overbought and selling to the first sign of oversold; you8217;ll be together with the trend and likely have identified a movement with lots of juice left. So if%k and%d are both crossing 80; buy! (Same on sell side; sell at 20)
38) Incorrect Broker #8211; A lot of FOREX brokers are dreadful; get a great one. Read forums and chats in several distinct areas to find an unbiased opinion.
39) Simulated Outcomes #8211; Watch out for #8220;black box#8221; approaches; those are trading egies that do #8217;t disclose the way the trade signals are generated. Great majority of them are complete garbage. They show you a track record of extraordinary results but think about it; if you can build a trading system with half a dozen filters using the advantage of hindsight, couldn#8217;t you also produce a wonderful system. Of course going forward is an entirely different story. High-speed number crunching abilities allows for constructing great hindsight trading egies; BEWARE.
40) Inconsistency #8211; Every company (FOREX trading included) requires a company plan (trading egy ). If you don't have taken the opportunity to write down a set of rules which you possibly can and will followalong with it#8217;s likely your trading will remain unfocused and directionless. Make a egy, have principles, follow them establish goals which are realistic and you'll reach them.
41) Master of None #8211; Concentrate on one currency for technical trading; each currency has a unique way of trading and if you don't get intimate with it you will never really know its underlying idiosyncrasies. Don#8217;t spread yourself too thin #8211; focus #8211; master one currency at one time.
42) Thinking Long Term #8211; Don#8217;t do it. Remain in the moment. Particularly if you#8217;re a day trader. It doesn#8217;t matter what happens next week or next month, in case your trading using 30 to 50 point stops restrict your thought process to exactly what #8217;s occurring right now. That isn't to stay the long term trend isn't significant; it is to say the long-term trend will not always help you when your trading a considerably shorter time frame.
43) Overconfidence #8211; Trading isn't simple; figures show 95% failure rate. In case your doing well don#8217;t take your victory for granted; always be on the lookout for ways to enhance what you#8217;do.
44) Getting Pumped Up #8211; The trick is to maintain an even keel; when you're in a trade that you want to think exactly as you want if you didn#8217;t even have a transaction on. To do this requires a relaxed disposition; this isn't a soccer match; don#8217;t get psyched up; relax and try to love it.
45) Staying in the Game #8211; I don#8217;t urge demo trading because traders learn bad habits when trading with play money. In addition, I don#8217;t think #8220;letting it all hang out#8221; right away is wise . Start off doing trades and accepting risk that's relatively modest but nevertheless makes a difference to you if you win or lose; about a quarter to a third of what you anticipate to achieve as your trading matures is reasonable.
Retired proven professional Bank FOREX trader with more than 20 decades of hands-on FOREX trading experience.
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Internet: http://www.eurusdtrader.com/
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