The interest in Forex trading has become increasingly popular all over the world. The ease of trading the Forex online combined with the opportunities for big profits have drawn traders from all over the world into the markets.
But many choose to ignore the Forex trading pitfalls that have been the demise of many traders. The relative ease of opening an account and begin trading immediately has caused many new traders to look past the pitfalls and make trading mistakes that often prove fatal.
One of the more common Forex trading pitfalls is over trading. Over trading is taking too many positions at once and for some traders it means always having an open trade. No matter what, some believe that the more positions they have, the more money they will make. Wrong.
There is no quicker way to use up your margin collateral than by over trading. Having too many open positions will make your trading career a short, but not sweet one.
Many who are new to Forex refuse to take small losses when they are inevitable. You are much better off to study and follow only a few currency pairs and look for an opportunity developing that will put the odds in your favor and allow you to make a reasonable profit than using a scattergun approach and trading too many pairs at once.
Traders who think that they always have to have a position in the market are only fooling themselves. Constant exposure only leads to disaster in the long run. Disciplined trading means learning to avoid unnecessary risks. Always try to look for only the best trading opportunities when they present themselves. There will always be another opportunity to make a well-planned profitable trade. Traders who exhibit patience and self control will make profits when other traders have long since blown their trading account.
Taking a position in the market without stop loss orders is another major pitfall that many investors overlook. Never, ever enter a position without a stop loss. Veteran traders Never adjust a stop loss order except to lock in a profit.
Study and become familiar with a small amount of currency pairs. Learn the tendencies and volatility of your chosen markets and you will become a much better trader.
Never over leverage your account. We all have losing trades. This is one of the hardest lessons for Forex novices to learn. Always maintain adequate funds in the event of a losing trade. Or a series of losing trades. It happens to the best of us. It has happened to me, and it can and will happen to you.
A good Forex trading system along with self control, proper money management, and patience will help you avoid many of the Forex trading pitfalls that other traders fall into.
