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Mistakes to avoid on Forex
Written by: PaxForex analytics dept - Thursday, 13 December 2018 0 comments
Do you wonder why some people are lucky traders on the Forex market for almost decades, while others are defeated almost at once? Are there any "golden" trading rules that sharks use in this market? If so, is it possible to learn these methods and use them in daily trading?
Of course, during the existence of the Forex market, the principles of trading have been formed, which should not be violated. Having understood and accepted them, you will be able to apply them in practice and make a profit. Also, it will allow you to minimize your losses or avoid losses at all. Now get down! Below you will see a few errors, the absence of which will help you to make your trading more lucky and effective.
No trading plan
These are a few rules that the trader uses in the process of trading. It can be treated as the simplest rules explaining:
- when you should enter into the deal;
- the size of the stop loss;
- when you should close a position;
Also, the plan can be supplemented by other items at your discretion. Such as:
- whether to increase profits;
- at what point should this be done;
- what other technical analysis data can be used in a particular case, and so on.
If you don't have a clear trading plan then you are trading emotionally. You do not rely on knowledge and calculations, but only give in to your emotions. It's like gambling, anyway. And this is the next mistake.
trading is not always successful. We mean transactions made not by the head, but by the heart. This applies to ill-considered transactions that occur immediately after the loss of money. This attempt to get the money back often leads to an even greater loss. Never open a position immediately after a major loss. You should always give yourself time to cool down.
No set size for stop loss
Stop-loss is a kind of fuse that traders set to limit losses on a single trade. It's just a necessary tool. It is used not only by beginners but also by very experienced traders. There is no reason to ignore the stop-loss setting. But many newcomers to the market, however, forget about it. Remember the same, only losing a much larger amount that they could afford.
Ignoring the data of the fundamental analysis
Currency prices depend on the economic performance of the country whose currency is traded. It also depends on the events taking place in the world. This data takes into account fundamental analysis.
This analysis shows us the movement direction of the currency pair. Also, the technical analysis shows the entry and exit points.
This article discusses the basic mistakes of traders, which often lead to fatal consequences. Of course, there are still some nuances that should be taken into account when working on the Forex exchange. Watch out for other articles on the subject of the Forex market and have successful deals.