The seven deadly Forex Trading mistakes - Part Four

The seven deadly Forex Trading mistakes - Part Four

Right - we've looked at strategies and planning, so that now we are ready to trade right? OK! At least, we are not ready to trade live.

Error number four - No testing

Forex Trading is a big business, it offers a potential level of income and freedom that most people can only dream of. So it is quite natural that having got the basis of the way, the novice trader is eager to click they buy and sell buttons and watch the profits roll in. But hang on - the preparation is not over yet!

Imagine for a moment that you decided you wanted to become a pilot of the plane. You spend time and effort researching the type of aircraft you were going to pilot, you read some books on how to fly, and one day will be found in the cockpit at the end of the runway. Clearly, without actually take some time to learn how to fly this machine full of passengers, trying to take off would be a disaster! So, why so many traders believe they can read a book on Forex Trading and then jump on the market without first getting some experience?

If the pilots were going to work, will bring training programs that will no doubt see you getting some no-risk experience in Flight Simulator. This will give you the opportunity to make all your mistakes early fall without some seriously expensive aircraft in the process.

As traders, we are very happy with that, as airline pilots can practice and hone our skills in a risk environment. In fact we have the added benefit that we can simulate our activities with a high degree of realism in little or no financial cost at all.

I am of course talking about "paper Forex Trading". In the most basic sense, paper Forex Trading means that we follow our Forex Trading plan exactly how we were going to put real money in the market, but where we will actually buy or sell, we just make a note of the current price instead of opening a live Forex Trading. We will continue to manage the trade exactly as if we had real money in the market, and output respectively, re-write the output price.

Go one step further by pen and paper, internet merchant generation today can take advantage of software simulators as Tsim>, which imitate the live Forex Trading platform. These programs have the advantage of making paper Forex Trading experience much more realistic, they also can not be fooled the same way as a note on a piece of paper, that we can easily decide to erase trade we later decided was a mistake!

There are some who believe that paper Forex Trading is not worthwhile as it can never reproduce the emotional stresses that are involved in live Forex Trading. While it is true to some extent, I would say that if you are not proficient in executing your Forex Trading plan in the simulator, why would you be able to do it with real money?

Paper Forex Trading gives us a great opportunity to put into practice what we have learned, test new strategies, and tune our skills without any risk. Once a trader can consistently show a profit on the simulator, they are ready to take the next step - a live Forex Trading. Again, this is not something to be hurried, and, again, as airline pilots can work on the road to this.

Just as the pilot is unlikely to make his first flight in a jumbo jet, nor we as retailers need to take a full size when you start Forex Trading real. If you trade stocks (shares) can be bought and sold in small quantities almost negligible cost. If futures Forex Trading, we can usually start with "mini" contracts that are part of the estimated cost for full-sized version. While this limits our profit potential as we take our first steps in the live market, it is very important also limits our potential losses.

With a large range of software tools available to us, along with discount brokers offering cheap Forex Trading instruments, no need for any trader to get seriously burned on their first outing in the market.

ACTION: We must commit to testing and practicing our Forex Trading risk-free environment before putting our capital market live. Only when you can show consistent profit on the simulator we have to move the Forex Trading real money, and then only in small doses.