Trading Forex is a complex task, and it can take months or even years of learning and experience to truly be successful trading on the financial market. If you are starting out with financial trading and you want to try and become successful as a trader, here are some of the most common mistakes which you should avoid making.
Not Using A Stop Loss
When you open up a trading account on any platform you will be able to set up rules from which you will open and close deals. One of the things which you will have the option to do is have a stop loss from which you create an order for your trade to close if the value reaches below a certain price. This is a huge safeguard for yourself and it is a way to make sure you never lose out on your profits. Always make sure to order a stop loss and this will manage the risk you undertake as you trade on the financial market.
Going All In On One Trade
One of the biggest mistakes which a lot of new traders make in their first few months is to become too confident and place all money in one place. The term ‘don’t place all of your eggs in one basket’ really applies here and you need to make sure that you spread your funds between a few different trades. This will lower the risk of you losing out and it will make it much more likely for you to make back at least some of the money you put in if not all of it.
Predicting Pairs From The News
It is incredibly tempting when trading on the stock market to use the news as a guide. For example, when trading the GBP/EUR pairing you might look to the current chaos surrounding Brexit and use this to determine which way to bet your money. Although sometimes the news can help you to gain an insight into the stock market, it isn’t the be all and end all. Other things will always affect the trends so it is better to think tactically and make sure that you really take the time to plan out your trades.
Not Having A Plan
Speaking of plans, one of the biggest mistakes you might make as a first time trader is to simply let guesswork prevail and have no plan on when you want to cut and run from a deal. It is always a good idea to sit down and brainstorm your plan of action before taking action in the market. Decide what your stop loss will be and where to set your limit order. Think about whether to go for a short or long trade and consider spread betting. Make sure that before any money goes into the market that you know your plan of attack.