Top Ten Mistakes Forex traders

Top Ten Mistakes Forex traders

When you think about investing, what you think of first? What aspects of investment are important, which are essential and which can take or leave? You be the judge.

The 10 most common mistakes that a trader ...

1st Do not have a trading plan.

2nd Do not Manage Money

3rd Do not use protective Stop Loss Orders

4th Taking small gains and losses provide your Run

5th Overstaying your position

6th Average loss

7th Increase your dedication to success

8th Overtrading Your Account

9th Failure to remove the profit from your account

10th Changing Trade Plan Mid-Trade ...

1st Do not have a trading plan ...

It really amazes me, the trade Mon trade, which often
"Losing the trader" approach is the same. A trader who thinks the market
is about to get up will usually say something like - "I think the
EUR / USD is going up $ 1.2000. Where you think you should buy
it? "My answer is usually something like:" Well, what are you risking
the trade? In other words, where are you going to leave if
OK? "Often there is silence, or confused" huh? "They never
thought to be wrong, they never thought about where to put the
stop. My next question - "Well, if it does go up, how and where you
getting out? - Often gets the same response.

Better than 90% of Forex traders who come into contact with no
trading plan. That means they do not know what to do if they are wrong
and they do not know what to do if they are right. The large paper profits
they did often turns into a big loss because they did not know where
to get out.

The most important step Forex trader can make is to develop trade
plan, before they enter the trade, consists of these guidelines.

o Know how and where you are going to enter the trade.

o you know how much money you are going to risk a trade.

o Know how and where you are going to get out if you're right.

o Know how and where you are going to take profits if you are right.

o you know how much money you are going to do if you are right.

o Have a protective stop loss in case the market does the unexpected.

o Have an approximate idea when the market needs to meet its goal, when to begin to make a move, if it has not done so, get out!

2nd Do not Money Management ...

I am constantly amazed at how I have a few Forex traders and brokers had no conception
of money management. Money management is controlling your risk through
the use of protective stops, while balancing your potential for profit against your
potential for loss.

An example of poor money management that I see almost every day ... many traders
relating to trade that could lose $ 500 if they are wrong and make them
$ 1,000 if they are right as two-to-one risk / reward ratio - a "decent" trade.
However, it is wrong because it is just as important to know proper win / loss
Participation of knowing how much you are going to lose if you are wrong and how
much are you going to do if you are right, but what are the chances of making
Money ... to be right? What are your chances of losing money, or wrong?

Good money management means you know your profit objective and odds
being right or wrong, and control risk with protective stops. You
better to trade, where you can lose $ 1,000 if you are wrong and
$ 500 if you do right, he would work eight times out of ten, than to
over trade, which would make $ 1,000 if you are right and lose only
$ 500 if you are right, but only in a period of three. Obviously,
this error can be overcome only by developing and testing money
management concepts. A book could be written on money
management principles ... but the key is knowing your winning percentage
together with appropriate risk / reward ratios.

3rd Do not use protective Stop Loss Order ...

This fits right in trading plan and money management. It is a failure
to use protective stop orders once you enter a trade - not mental stops,
but actually stops that can not be removed. Too often use Forex traders
mental stop, because in the past have been stopped, and then
I watched the market move in their direction. This does not invalidate
use of protective stops, it means that their visit was probably in the wrong
place as they had good technical stop. When the protective stop
that was determined before entering the trade is hit, it means that your
Technical analysis is probably inaccurate ... your trade plan was in order.
With a mental stop, once the market has gone through your protection
stop price, you no longer act as a rational human being. Now, you are most
likely to make decisions based on fear, greed and hope.

How many times have you had a mental stop then tried to make a decision
whether or not to take a loss? Typically, when a decision is reached,
the market has run for an additional $ 300 against you. You can always decide to hold
on trade in the hope that they can get out of your breach of the Fibonacci
Previous stop price. Unfortunately, in many cases we have seen, it never touches
that price and then you take a huge loss. Or you can make a mistake to maintain
Commercial extra day because I hoped to go higher the next day.
But the next day he is smaller yet, and then your loss is so large that it could not "afford"
to come - and what should be a small loss turned disastrous. There
an old adage that the first loss is the smallest. It is also the easiest to take, even
though it may seem difficult at this time.

The only way to overcome this error is to have unbreakable rule (and
discipline to follow!) that the protective stop loss order must be placed at each
trade into. I found the easiest way to take a loss is to place protective
stop order or the moment immediately after entering the trade. Do your homework
when the markets are closed or slow, and orders, while the market still
quiet. Another rule to follow, under no circumstances should primary care
cease to be changed to increase the risk .. but only reduced.

4th Taking small gains and losses Sent allow your ...

So far we have discovered some interesting facts about investing. You may decide that the following information is even more interesting.

A very common mistake among Forex traders take small profits and letting
lost works. This is often due to lack of trading plan. After one or two
losing trades, you are very likely to make a small profit even at the next trade
though it may have a trade turn into a winner who will be compensated
all your losses. Letting your losses run often happens with new traders and
Not uncommon even among professional Forex traders. After entering the trade,
you do not know where to come. Once you start to lose money on certain
trade, your tendency is to let your losses are bigger and bigger as we hope
the market will retrace to break even - which of course, it rarely does.
This error is overcome by using a predetermined protective stop loss orders
prevent your losses from running, and after your trade plan to take profits
your profit goals.

5th Overstaying your position ...

One common mistake of trading currencies is your overstaying
position, or simply failing to take profits at a predetermined level. It seems
be a natural law that the market is only going to allow one individual so much
money before you start to take it back. However, it is when you have these profits,
especially real profits in your account, which often try to get the last nickel
outside the trade.

If the market meets your profit objective and you are still in the trade without
output in order, then you are overstaying your position ... period! Very often the
market breaks sharply through your "mental stop" and from that price level,
watch your profits disappear before your eyes. Then you decide to keep
trade for a small rally, and the market never rallies enough. Back Drops
to break even, and now really begin to hope. The next thing you know
have a loss. Be aware that large profits can be turned into an even greater loss.

The only exception would be if the price action is going strong in your direction.
In this case, you can move your protective stop to your profit target or use of
trailing stop.

6th Average lost ...

This is usually a holdover from trading stocks or futures, Lord knows they are guilty of this one myself on more than one occasion. In exchange, with 50:1
or greater margin, averaging a loss can be disastrous to say the least. Typical
approach is that after you went long and drops lower, you might figure out
that it was a good buy then, it is better buy now. Can be justified on average
by finding will have a lower average entry price and require less
move to break even. Unfortunately, you will lose twice as much if the market
goes against you, as it almost always does.

There are approaches that will allow you to buy the market at one price level, add
on the lower level and add it back in even lower level, as it was
Your predetermined game plan before entering the trade at the beginning. Must
neprestojno also have protective stop loss order that will be outside the
position. This error is easily overcome by having a strict rule that you never
average loss unless your predetermined trading plan called for an average trade
incase the market moves against you ... As long as you have pending neprestojno
protective stop loss order to exit your entire position if it is hit.

7th Increase your dedication to the success ...

One of the most common mistakes I see with Forex traders is increasing the risk
exposure because you think you are on a winning or losing streak. Only by
successful on a few trades, you risk more dollars to trade because you have
more money. But because you have more money (and confidence) when successful,
You are also likely to be larger percentage risks. Not surprisingly, this ruins more
Forex traders by a series of small losses. You can overcome by not make the same mistake
allowing your risk percentage to increase as unreasonable and realize profits from
maintaining protection of your stop loss discipline. What I mean by unreasonable
this ... a typical trade, your risk should be 1 to 2.5% of account size depending
Trade confidence. How do you see yourself on the winning streak, you are tempted to
increase the risk percentages. Never increase the risk percentage more than 5%
your account on a trade. In addition, I have seen Psychology
of traders say where they risk more by losing streak and risk less to win
Streak thinking that after a string of winners, loser has to come at any moment ...
Or, increasing their size, after a string of losses thinking they should have won
Trade now. Do not fall into this trap thinking!

8th Trading Over Your Profile ...

Or risking too large a percentage of your account on any one trade,
or too much risk dollar contract or contracts to trading too
for each trade or by trading too many currency pairs. This also happens
after a period of choppy consolidation when you "know" that the market will
to do something. You're so sure that this will be really big move
that the risk much more than a maximum of 5% of your account.
Already emotionally out of balance, all you need is a few limit moves
against you and you are bust. To prevent this error occur, will
there must be a hard and fast rule that we can not risk anything more than a certain
percentage of your account on any trade regardless of how good
trade looks.

9th Failure to take profits from your account ...

It's almost a natural law that the foreign exchange market during a certain period of time
will allow you to do only so much money, then you are going to have
begin to give some back. However, probably no more than 1% of all Forex
retailers know that you need a rule to take profits from their account. (But they are
quickly put money into their accounts and their accounts are reduced to levels untradable
levels). You can not believe how often I see traders leaving a profit on their accounts
and go to the "big trade" - the one that will give real "murder" - which
usually kills its profits. This can be overcome by predetermining an equity level
that will remove the profit from your account. When you make a profit
Foreign exchange market, take some money and put it elsewhere. You, like all
Forex traders will move in cycles. You make some, lose some, make some
lose some. By taking money from your account when you are profitable, which
will not make the mistake of losing large sums of money when the down cycle begins.

10th Changing Trade Plan Mid-Trade ...

During the prime trading hours will be subject to emotional reactions of fear and greed
much more than when the market is quiet. Have you ever noticed that when
you sit down during slow Asian session, very humbly to figure out what you
want to do during the often busy London session? However, shortly after the London
Meeting opens or when the market gets busy, right opposite of what
you had planned. With rare exception, the best approach is to not change your
trading strategy over the prime trading hours unless there is a breaking news event
or market reaction. Overcoming this error by developing your trade plan
busy market hours and have the discipline not to change your trading plan then.

Those who know only one or two facts about investing can be confused with false information. The best way to help those who are misled is to gently correct them with the truths you're learning here.



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