Accidental Mistakes in Forex
An accidental mistake can be defined as a mistake that is 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 planning to buy, it is the classical case of an 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 a
stop-lossfor 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 it still happens to the best of us. For example, one trader wanted to place trade a trade in the copper CFD but forgot to switch the volume digits to "1" instead of "2" (normal for Forex) in the expert advisor. What happened next is that EA's trades were rejected due to incorrect volume (0.35 instead of 0.3). That trader missed a very nice profit due to that failure.
- 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-unexpectedresults. Of course, it is very difficult 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 the expiration to 2022–09-20. 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.
It is estimated that about 2-3% of the average trader's balance is lost each year due to accidental mistakes (including cases when these mistakes prevent trades from triggering). In most cases, this could be mitigated by using a well-defined trade entry checklist.
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 join on our Forex forum for a discussion.