Trading in the Forex market can be really exciting and with the widespread use of the Internet, it is very easy for anyone to open a trading account and start trading in the largest financial market in the World. And Mistakes in the forex market are normal and regularly prompt as a common forex trading mistakes. There are no actions without mistakes. There are no results without actions. These mistakes crop up, especially with fresher traders all the time. Monitoring these common forex trading mistakes can assist traders in getting more productive in their forex trading.

We’ve prepared for you a list of popular mistakes beginner traders make in Forex trading. We explained seven most Common Forex Trading Mistakes that you ought to maintain a strategic distance from

Common Mistake – #1 Not prepared

The rather easy entry to the Forex market is the main reason why people have such a light-minded attitude towards the knowledge base essentials for quality trading. They often think that the theory is not a big deal, and the beginners will be able to build it up without a peep. This trick isn’t working at all. The most number of successful traders had started their financial education long before they got moving. Forex is not a school – nobody puts pressure on you, but to show the stable results, you have to understand what you are doing.

Why is it so bad? Without a good base, you don’t know how to produce an adequate trading plan. That inevitably leads to the unpleasant consequences, because you can’t analyze things you probably do wrong.

How to avoid it? Find time to develop your skills. You may work hard without interruptions during the week or do it gradually, e.g., spending half an hour each day during a year. It doesn’t matter which way you choose – you have to study financial theory.

Common Mistake – #2 Not giving importance to strategy

A well-thought-out plan is one of the best companions for you on Forex. It makes your way transparent and shows what, how, and when you will trade. It looks like the decision-making scheme, where particular indicators show you when you have to close or open deals. However, beginners often miss this part and enter the market whenever they want.

Why is it so bad? Without a strict plan, you fall into the clutches of panic and fear. It leads you to hasty market decisions, which eventually result in trading mistakes. Intuitive trading may bring you some benefits at first, but if you trade unsystematically, you can lose everything.

How to avoid it? Work out a plan and try to stick to it. Don’t be upset when you are losing trades. Sometimes it’s just a bad day and nothing else. Starting with a simple strategy is always the right choice.

Common Mistake – #3 Not operating the leverage in professional way

Operating Leverage/Margin alludes to the utilization of lent money to open forex positions. While this element requires less personal capital per trade, the chance of exaggerating loss is genuine. Moreover, operating leverage amplifies gains and losses. So, operating with the measure of leverage is major. Besides, brokers hold a significant job in securing their clients. Numerous brokers offer meaninglessly huge leverage levels—for example, 1000:1, which puts amateur and experienced traders at great risk. Systematic brokers will capitalize on leverage on favorable levels guided by reputed financial authorities. Operating huge leverage can give you massive returns, but also can harm your whole trading account as well.

Common Mistake – #4 Ignoring market events

Don’t deny the importance of relevant market news. Economic events influence the directions of trading during the day. There is no need in trading the news, but it’s essential to be aware of it.

Why is it so bad? If you follow no news, you may skip the volatility these events produce. Another problem is that right after the release, the spread between the bid and ask price is often way much bigger than usual. It makes it hard to find the liquidity to leave the position at the price you prefer.

How to avoid it? Check out fresh news and economic events to be abreast of the latest possible changes and get ready to make moves. Create the strategy, which considers the volatility.

Common Mistake – #5 Risking More Than You Can Afford to Lose

The key part of your risk management strategy is to establish how much of your capital you are willing to risk on each trade. Day traders ideally should risk less than 1% of their capital on any single trade. That means that a stop-loss order closes out a trade if it results in no more than a 1% loss of trading capital.

That means that even if you lose multiple trades in a row only a small amount of your capital will be lost. At the same time, if you make more than 1% on each winning trade your losses are recouped.

Another aspect of risk management is controlling daily losses. Even risking only 1% per trade, you could lose a substantial amount of your capital in a single bad day.

You should set a percentage for the amount you are willing to lose in a day. If you can afford a 3% loss in a day, you should discipline yourself to stop at that point. Day trading can become an addiction if you let it. Only play with the money you have set aside, and stick to your strategy

Common Mistake – #6 Take Multiple Trades That Are Correlated

You may have heard that diversification is good. Diversification is a strategy that depends on your knowledge, experience, and what you are trading. In diversification you may be inclined to take multiple day trades at the same time instead of just one, thinking you are spreading your risk. Chances are you are actually increasing it.

If you see a similar trade setup in multiple forex pairs, there is a good chance those pairs are correlated. That is why you are seeing the same setup in each one. When pairs are correlated, they move together, which means you will probably win or lose on all those trades. If you lose, you have multiplied your loss by the number of trades you made. If you take multiple day trades at the same time, make sure they move independently of each other.

Common Mistake – #7 Choose the Wrong Broker

Depositing money with a forex broker is the biggest trade you will make. If it is poorly managed, in financial trouble, or an outright trading scam, you could lose all your money.  Take time in choosing a broker. There is a five-step process you should go through when deciding on which broker to use. You should consider what you want to accomplish, what a broker offers, and use reliable sources for broker referrals. Then, test the broker using small trades at first.

There are numerous CFD brokers globally, so choosing the right one can be difficult. Financial stability and proper regulation are essential before opening an account with a broker. This information should be readily available on the brokers website. Safety is the primary focus; however, a comfortable platform and ease of execution is also central to choosing a broker. Becoming accustomed with the platform and costing should be given ample time prior to trading with live funds.

Conclusion

Having the right principle based on forex trade is significant before embraced any type of live trading. In the long run, all traders will commit trading mistakes still lessening up them just as dispensing with repeat offenses must be practiced and become desired conduct. There could be many other factors that might hinder you from becoming a successful trader. However, it is important to acquire the proper knowledge and avoid committing common mistakes before venturing into the field of forex trading.

Always beware of operating leverage, Market events and always maintain the risk-reward ratio. The principal focus of this article is to stick to a trading plan with proper risk management.