To help you get more out of your trades we've put together a few insights to help you avoid the common trading mistakes people make when they start trading Forex. Taking just a few minutes to read through this list could help you learn to sidestep crucial trading errors which can stand in the way of your trading success and cost you money.
1. Know when to cut your losses. Every trader sees the market go against them sometimes. Successful traders know that profits are achieved by owning up to your mistakes quickly in order to keep your losses in check. Dropping your failed trades will free you to focus your attention on looking for the next successful trade to make up for them.
2. Focus on money management and a trading plan. Uncontrolled emotions are the number one cause of trading losses. Don't let your emotions sway you, stick to your trading plan and remember to set (and stick to) your Stop Loss orders.
3. Take personal responsibility for your trades. Great traders accept personal responsibility for everything they do. Remember that you're the one who is pulling the trigger. Great traders know that they are responsible for all the trades they make, either good or bad. Blaming the market or bad luck can cause a trader to lose focus on their ability to learn from their trading errors and apply their lessons to improve their trading in the future.
4. Don't become greedy. When traders have an open trade that is making them profit they often forget their pre-determined target for the trade, as they are sure that the trade will continue to make them profits. Remember that the markets are dynamic and that no trend lasts forever. If the price reaches your target, bank the profits or move your stop-loss forward to prevent a loss.
5. Trade the News. Most of the really dramatic moves in the Forex market occur around important news events. Trading volume increases in advance of news releases and the resulting moves are normally significant,allowing traders to grab pips from rapid market movements. News-traders will often make only one trade a day due to the large potential profits involved by correctly trading important news releases.
6. Never trade on wishful thinking. If you place a trade and it's not working out for you, get out! Don't compound your mistake by staying in and hoping for a reversal.
7. Psychological Factor. Uncontrolled emotions are the number one cause of trading losses. Don't let your emotions sway you, stick to your trading plan and remember to set (and stick to) your Stop Loss orders.
8. "The Trend is Your Friend. When trading in the direction of a trend you're trading with the majority in the Forex market. As a result you're trading results will generally improve.
Follow these guidelines and you should start to see an improvement in your trades immediately. But remember, the key to becoming a successful trader is discipline and the ability to stick to a set of rules.