Even when you are well past the newbie trader stage, revising your trades, you might still be finding yourself making the same mistakes over and over. The multitude of these mistakes should of course be getting lower, but sometimes emotions overcome the mind and the strategy and, as a result, pips are lost. Here is the list of the most devastating and stupid things you can make in Forex trading:
- Don't place stop-loss — sometimes you just forget to place your stop-loss, sometimes you hope for the price to eventually go the "right way" and think that a stop-loss will be an obstacle. This is wrong! Always place a stop loss — it should be placed strategically to prevent the trade that didn't go according to your plan from ruining your entire account.
- Trade in lots too big — even if you are 100% sure that this position will be profitable, do not make it too large — a risk size of 1%-5% of your account size is more than enough. Losing 20% of your deposit will require earning as much as 25% to recover that loss!
- Overtrade — everyone says that it is bad to overtrade, but for a trader, it is always difficult to stay away from the market when there are so many opportunities. Just try to set a limit for daily/weekly trades for yourself. Overtrading is a result of an emotional response to the market forces. Such trading decisions aren't dictated your mind, so avoid them at all costs.
- Closing the winning positions too early — it seems OK to get some guaranteed profit compared to risking to wait even more. However, general trading experience proves that early closing of winning positions and waiting for losing positions to go green is a completely wrong approach. Let your winning positions run and cut your losing ones early!
- Following forecasts and signals — for some traders, it is hard to avoid this, especially when there is some Forex guru they respect. Trading with your own strategy and full responsibility is the only way to becoming a professional and successful Forex trader.
You have probably already read such advice a dozen of times, but they are always good be reminded of, so please consider it just a helpful memo.
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