Most Common Mistakes in Trading to be Avoided
Forex market is considered to be largest financial markets in the World. The trade volume in the market is huge. Though it is very easy for everyone to enter into the trade, sustenance is tough. It requires a lot of discipline and planning to stay in the market. It is important to trade in such a way that you trade logically and slowly, make regular profits and avoid the losses thereby safeguarding your investment. There are some Common Mistakes in Trading that people commit. In this blog, we have researched on most common mistakes that a trader should be avoided.
6 Common Mistake in Trading to be Avoided
1. Required Large Amount of Capital
It is the standard expectation of every person to gain the huge profits from the forex trade.
This is the reason that many people risk a large amount of capital on a single trade.
It is not always true that higher the amount of risk higher in the profit/return.
It is a basic rule that not more than 1% of the capital should be risked for the specific trade. Even the professional traders do not risk more than 1% of their capital.
2. Unrealistic Trade Expectations
The forex market is highly volatile and vulnerable to significant risks. The market can react in an illogical, choppy and silly manner. The market can be very erratic. Be realistic.
You should express the proper strategies to deal with the unexpected changes in the market.
Consider forex trading as a business. You should never consider it as gambling. Accept the small losses in it. Keep patience, be realistic about profits.
3. Method of Averaging Down
When people enter in trade, they do not have any intention of applying the averaging down options. But the gradually as their expectations rise they start with the concept of averaging down without realizing outcomes. They continue to hold the positions for a long period of time.
4. Proper Positioning
Forex market is very volatile. Several events are happening around the world affects the forex trade. We only predict a specific decision or event happening can affect the forex trade but cannot we can predict the implications of trade perfectly.
So it is always advisable to place yourself safely so that the implications of the events do not expose the success.
5. Entering into Market at the Closing Time
The market is very volatile on Friday. Many things happen and affect the trade on Friday. So never focus on trading at the time of closure. If you enter a trade on closing time, stay on your trade for next business day after the weekend, you may face fall in the market gap or unexpected incident which may cause huge loss.
Click on below Video to understand the theory of Exit Strategy
6. Stay Focused on Strategies
Do not focus much on the obstacles and reactions but abide by your strategies and maintain a trading discipline. Do not switch to various strategies. Try to focus on single one. Do back-test of strategy. If you finally find that your strategy is working fine, and then applies it to the live account.
Trading can be a profitable Endeavour, as long as this Common Mistakes in Trading mentioned above can be avoided.