13 Common Mistakes of Forex Traders

13 Common Mistakes of Forex Traders

While the Forex market offers many advantages to traders, details that are not taken into account or ignored may return to the traders as a loss. These are the mistakes that Forex traders make the most;

1- Making High-Volume Trades: Leveraged trades require a different risk perception compared to spot markets. The proportional difference (leverage) between the investors’ trade size and their principal is something they should definitely consider. Taking a position using all or most of the capital in the Forex market may cause the Forex traders to lose their capital in a short time.

2- Not Determining Take Profit and Stop Loss Levels: As it should be, if the traders are acting within a strategy, they have a target price when they enter the position, and they should have determined with the take profit and stop-loss orders at what price our position will be closed if the risk materializes, and how much loss they will incur. Otherwise, the loss will be inevitable.

3- Carrying a Loss Position for a Long Time: If traders do not predetermine the level at which they will exit the losing position and if we carry our losses for a long time with the expectation that the market will turn in our favor, our capital may erode to a large extent.

4- Making Emotional Decisions: Without exception, all decisions are expected to be free of emotions for a trader, and always the hardest part of the job is to make decisions isolated from emotions. Investors will be successful to the extent that they can maximize this.

5- Trading for the Sake of Having Done: Trading in financial markets is a serious business that requires attention. Rational Forex traders realize that frivolous transactions will not yield steady returns.

6- Trading Without Gaining Experience: Starting transactions with trial accounts without creating a profitable strategy can be the most costly way to learn how to trade.

7- Acting Without a Plan: It is assumed that all movements in the market are irrational. One of the important requirements of not losing in such an environment is to have a plan.

8- Not Sticking to the Stop Level: If investors are changing the stop level because they are afraid of facing a growing loss, this may be a harbinger of a bigger loss.

9- Acting Independently of the Strategy Established: The most important part of a strategy is a loyal practitioner.

10- Trading with a Large Amount and Frequently: Trading with a high amount causes the Forex traders to carry great risk, and trading frequently can be tiring and stressful.

11- Acting with Senses: If traders enter the position only with sensations, they are likely to be mistaken. It is necessary to enter the position with rational decisions.

12- Opening a Position with Insufficient Information: If investors think that they do not have enough information, they should practice for a while, and follow the market will help them.

13- Overconfidence: Investor’s self-confidence is desirable, but overconfidence causes them to not analyze their mistakes and admit that they may be wrong.

SEE ALSO: What Is Forex Portfolio Management?

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Caroline Tetra

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