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How Much Do You Lose to Accidental Mistakes in Forex?

August 18, 2014 by

I define accidental mistakes as those mistakes that are not related to the employed trading strategy or methods of analysis used by the trader. For example, when a trader unintentionally presses a “Sell” button instead of a “Buy” button when he planned to buy, it is the classical case of accidental mistake. At first glance, such errors may seem minor and negligible, but active traders may lose a significant share of their balance to such accidents.

Some other examples of this sort of mistakes are given below:

  • Mistyped entry/exit level — probably one of the most popular of them all. Most trading platforms protect traders at least partially against such errors, but even their protection fails when you misplace tenth and hundredth digits in a quote. E.g. setting stop-loss for the EUR/USD long trade to 1.3230 instead of 1.3320 could lead to extra 90 points of unexpected loss.
  • Setting wrong volume size for expert advisor — a rare error for the majority of traders, but my most-recent trading failure is exactly due to this kind of error. I had set my ChartPatternHelper EA to trade a double-top formation on copper, but did not change the volume digits to “1” instead of “2”. What happened next is that EA’s trades were rejected due to incorrect volume (0.35 instead of 0.3). It looks like I have missed a rather nice trade due to that.
  • Trading wrong currency pair — it seems very stupid, and it is very stupid, but it still happens. Clicking New Order on a wrong chart or selecting a wrong currency pair in the Market Watch window will lead to the most-unexpected results. Of course, it is very hard to confuse prices of USD/JPY and EUR/USD, but entering a position in EUR/AUD instead of EUR/CAD is very easy.
  • Setting invalid expiration date — leaving a pending order active for months or, on the contrary, letting it expire too soon can be equally bad for your bottom line. E.g. you want the order to expire on Wednesday this week and accidentally set expiration to 2014–09-20. The price then drifts away from your entry point, and you forget about that order, thinking that it had already expired. Then one month later, you might get a surprise entry when you would not want it at all.
  • Trading in a wrong account — mistake that can happen if you trade on multiple accounts or use several trading platforms. One variation of this kind of errors is when you accidentally open a demo trade instead of a live one or vice versa. Missing a profitable trade or executing some crazy experimental trade that was meant for a demo account is rarely a good thing.

Basically, the only way to avoid or at least minimize the effect of such errors is through the use of checklists. Every trader should create a checklist that will list all the routines necessary to open a trading position successfully according to his or her strategy. Checklists are known to save lives, but in Forex they can help you save money.

Checklist

I believe that about 5% of my trading balance is lost each year due to accidental mistakes (including cases when these mistakes prevent trades from triggering). I am yet to create my own FX trading checklist, but I am determined to do it. And how about you?

What part of your balance is lost every year due to non-trading errors?

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If you want to tell us more about your experience with executional, transactional, infrastructural and other mistakes, which are not related to your Forex trading skills, please use the commentary form below.

One Response to “How Much Do You Lose to Accidental Mistakes in Forex?”

  1. Forex No Deposit Bonus

    When the trader lose the money in this business then he blame the forex business. This is not good and desirable. The trader should over come the weakness area and also approve the knowledge skill and avoid the mistakes which were occur during the trade. Avoid from them if he want to earn the money from forex.

    Reply

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