3 Common Mistakes Made By Forex Traders

November 30, 2013 by  
Filed under Forex Trading System

It is widely known that about 95% of new forex traders will lose money and quit in the first 2 years, by eliminating these 3 basic mistakes you will be one step closer to success.

1. Trading Around News Events – Before considering a trade always look at the news events calendar and do not trade within 1/2 an hour of a major news event. You can look at the Forex Factory online news calendar, the major events are denoted with orange or red icons. Around these events the volatility greatly increases and the market tends to whipsaw, your position can be quickly stopped out. This is an important habit, if you’ve been trading for any length of time without checking for news you’ve likely been stopped out unnecessarily due to news events.

2. Overly Tight Stop Losses – A very common mistake that amateur traders make is using overly tight stops. Each currency pair needs some “room to breathe”. If your stops are too tight, you are at a great disadvantage. Always consider that you have to pay a spread to your broker. Let’s say that you are trading the Euro/Japan cross and your broker has a 4 pip spread. If you set a 20 pip stoploss and 20 pip take profit, due to the spread you effectively need 24 pips in your favor for a profit and you will be stopped out if the trade goes 16 pips against you. The Euro/Japan pair tends to have a greater volatility compared to most pairs. Unless you are very close to a major support/resistance area, this will not be enough breathing room.

3. Inconsistent Trade Strategy – To gain successfully with trading, you need to have a consistent strategy. There are many traders who will find a strategy that has a winning edge but end up losing because they are inconsistent. Imagine a trading system that has a history of winning 70% of trades, this means that over 100 trades you should win about 70. As long as the risk to reward ratio is even or in your favor this will be profitable. However, if after losing 5 trades in a row (which can happen) you decide to change part of the system you are no longer trading consistently. This is why it’s a good idea to trade on a demo or micro account for a couple months until you build up your confidence in the system. It’s easier to stay emotionally balanced and just take the losses when they don’t hurt your wallet.

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3 Common Misconceptions In Forex Trading

November 7, 2009 by  
Filed under Automated Forex Trading

Article by Sebastian Sim

Forex trading is too risky!

Any forms of investments or trading are risky! However, it is only risky if the traders themselves are not educated in Forex trading. It is just like driving a car without learning how to stop the car. Many losers prefer to listen to their friends or so-called “analyst” instead of enrolling with some Forex trading courses to get educated. They prefer to pay expensive ‘course fee’ to the market and learn nothing from it.

You need large amount of Capital in Forex Trading!

Not True! Many losers think that they would be successful if they have more money or could trade a bigger account. All losers get knocked out of the game by a string of losses or a single huge lose. Often after they are square off in the losing position, the market reversed and moves in the direction he expected.

A loser is not under capitalized, his mind is underdeveloped. A loser can destroy a big account almost as quickly as a small one. He will overtrade and his money management is sloppy. He risk too big, a streak of bad trades puts him out of business. It is important to have the right education for your success in Forex Trading.

So start trading part-time first!

This Software Will Make You Money$ $ Without Even Knowing How to Trade!

Imagine a stranger walks into your driveway and tries to convince you an automatic system for driving your car. Just a few thousand dollars for a CD or chip install in your car and you can nap in driver’s seat that brings you to work. You would probably laugh the salesman out of your driveway. Now, would you laugh if he tries to sell you an automatic Forex trading system?

Traders who believe in autopilot myth think that the pursuit of wealth can be automated. Some try to develop, while some buy from ‘expert’. Men spent years honing their skills as lawyers, doctors to be one. Do you?

I am not totally against automated trading. It’s just that before you buy the next autmated trading software, you need to ask yourself if you know your stuff.

About the Author

I was involved in many money making opportunities; real estate, multi-level marketing, financial advisor….etc and they never really turn out well for me. It was in 2004, I was introduced to Options Trading by chance. After getting to know more about Options trading, I decided to further pursue my passion in other financial instruments.My life passion is now in investment trading, and hope to hear your comments and get connected with you http://www.onlinetradingfx.com