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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A Demo Forex Trading Software: Your Ticket to Avoiding Expensive Rookie Mistakes

November 17, 2013 by  
Filed under Forex Trading Software

Statistics suggests that 90% of retail forex traders lose money in currency trading. If you’re a rookie to the trade, it’s more likely that you’ll get the same fate.

But don’t get easily dispirited by this piece of bad news as there is still hope in the profitable forex market. With the demonstration software forex trading system developers offer their possible clients, you can gain experience before subjecting yourself to the high risks inherent in currency trading. Consider this as practice time before you delve into the reality of Wall Street!

The Mechanisms of the Demo Software

The best thing about the demo forex trading software is that it lets you confront the demons of currency trading without risking your hard-earned money.

Your demo software lets you pretend to put in real money and to buy and sell currencies – this is how accurate these programs are. In addition, you can observe the status of your endeavours and maintain an account.

Depending on the demo forex trading software that the website offers its potential clients, you can use the trial software up to 30 days. Thirty days is more than enough time for you to learn the basics of the trade, including the skills and feelings related to currency trading.

Depending also on the forex trading software, you may either have the demo software for free or for a minimal fee. If you’re paying a minimal fee, on the other hand, this is insignificant compared to what you will reap when you have applied the principles of trading to real trading. Look at it as your investment in forex trading education and the school of hard knocks, sort of.

Profiting from the Demo Software

In this extremely competitive and exceedingly volatile world of forex trading, the capability to control your feelings such as greed and fear and to act on objective criteria based on technical and fundamental analysis is highly valued. Indeed, your emotions have no space whatsoever in forex trading!

With your demo forex trading software, you can monitor your strongest and weakest points and spot the situations when you haven’t kept your emotions in close check. Obviously, you can buy and sell currencies but all these without having to risk your money and confidence. In this type of endeavor, confidence is essential as you’re dealing with one of the most valued possessions of man: money!

On another light, currency trading also requires your utmost professionalism at all times. Given ample time, with constant practice and with the aid of your demo forex trading software, you will develop into your most professional self.

Professionalism is also a primary criteria for anyone who wants to make it big in currency trading and this is developed with the aid of the demo software.

Having full understanding of the field and having practiced to perfection, you are now prepared to play balls with the other established institutions. With a sound system and accurate information, you are now on your way of becoming one of the wealthiest men you’ve ever known!

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Automatic Forex Trading Systems – The 3 Deadly Forex Mistakes That Will Destroy Your Trading Account

July 11, 2013 by  
Filed under Forex Trading System

Automatic Forex trading systems are often trumpeted as the way for beginner and veteran traders alike to eliminate emotional decision making and mental issues from their trading. The reality is that there are still many emotional and psychological traps that can hinder any trader’s Forex automatic trading operation, even with the best Forex trading systems.

There are 3 deadly Forex mistakes that can prevent the successful operation of automatic Forex trading systems and Forex robot traders, and by the end of this article you will be able to identify these deadly mistakes and eliminate them from your Forex automatic trading.

So where do most automatic Forex trading systems fail? Believe it or not, most Forex robot traders actually lose money because of the person running the Forex robot trader, and not the person who developed it. This failure stems from mistakes made by the operator of the automatic Forex trading system while affected by the following psychological factors:

Deadly Mistake #1: Greed

The first deadly mistake that prevents most Forex system traders from realizing the full potential of their automatic Forex trading system is greed. Many Forex robot traders allow the trader to adjust the money management rules of the system in relation to the account balance and the level of leverage available.

Greed causes many traders to make the mistake of trading lot sizes that are too big for their level of leverage, which often results in a rapid wipe out of the trading account. When determining trading lot sizes for your Forex robot trader, be sure to err on the side of safety so as not to fall into this trap of greed.

Deadly Mistake #2: Impatience

The second deadly mistake that prevents most Forex system traders from realizing the full potential of their automatic Forex trading system is impatience. Once they have bought their Forex robot trader, they just can’t wait to load it up with real funds and begin their Forex automatic trading right away.

This goes against the cardinal trading rule of always prioritizing capital protection. Every automatic Forex trading system must be tested on a demo account first to verify the results advertised by the developer, as well as to familiarize the user with the correct application of the Forex robot trader.

Deadly mistake #3: Fear

The third deadly mistake that prevents most Forex system traders from realizing the full potential of their automatic Forex trading system is fear. This is closely tied with mistake #2 and the lack of live demo testing before commencing Forex automatic trading. Without the experience of trading the Forex robot trader on the demo account, the trader will not know what to expect from the automatic Forex trading system and will be prone to prematurely shutting down the Forex robot trader and returning it for a refund.

To avoid lost profits on a perfectly functional Forex robot trader, every trader must trade it on a demo account for at least 30 days to determine the basic parameters of the system (e.g. average profit/loss, standard deviation & upper/lower range limits).

Are you making any one of the 3 deadly mistakes: greed, impatience and fear? If you are, stop trading immediately and take the necessary steps to correct these mistakes before you go any further. Otherwise, you are putting your trading account balance in grave danger of a blow out.


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