7 Fatal Mistakes in Forex Trading
Business activities are always related to profits and failures, just how you manage your business. The parable of “high risk high return” is true, high profits will be followed by a high risk. The right business decision indeed determines the results of your business experiencing profits or losses.
Fatal Mistakes in Forex Trading
Likewise with forex trading, wrong decisions can cause you to lose money. High caution is needed in order to be able to avoid mistakes in choosing decisions.Here are 7 fatal mistakes in forex trading:
Fatal Error – There is no trading system
The existence of a trading system gives a clear depiction of your trading, where it is going and how the process is and helps you in deciding what attitude to take.But if you don’t have a trading system, then your trading will run irregularly and in a mess. You will definitely experience confusion because there are no clear trading guidelines. Most likely you will make wrong decisions and result in losses.
Fatal Error – Not Understanding the Trading System
Trading system is very important for those of you who want profits in forex. But sometimes you don’t understand the purpose of the trading system that you choose, such as:
- Technical analysis is used as an illustration of the previous to current price movements and predictions for future movements. But you too believe in the movement without considering careful planning.
- It is recommended to use a short time frame.
- The indicators that are used are very many, as we know that the indicators are various automatic ways to analyze them as well. When an indicator provides trading signals and other indicators do not, you will experience confusion in making decisions.
Fatal Error – Not Discipline
Not being disciplined is one of the fatal mistakes you often make. You may have already implemented a trading system, but you did not implement the system rules that you applied so it would be useless. Trading system is implemented so that your trading is directed, but you don’t use it, it’s the same if your trading system is only used as a display. Most traders trade only impulsively without seeing the system they are implementing, so trading will be messy and disheveled.
Fatal Mistakes – Don’t Learn and Practice Forex
You should take the exam, of course you need to learn and often practice questions to get the values that are in line with expectations. Likewise when you trade forex, you definitely need to understand forex trading theories by reading books, attending seminars, and lots of forex trading exercises. When you do not understand about forex trading and are not diligent to practice trading as well as you have made one of the fatal mistakes in trading.
Fatal Error – Not Implementing Money Management
Money management in forex trading is very important because money management helps you in controlling the risk of loss. When you ignore it by not applying money management, the risk of loss will be huge. You do not trade according to Money Management rules so the funds have a great chance of experiencing losses.
Fatal Error – Leaving aside the Psychological Effects
Psychological effects are closely related to human mental conditions. Human psychological factors will affect a trader in trading. Why did it happen? In the world of trading it will definitely suffer a loss, then how will your psychological management accept this loss? Most traders make a fatal mistake by putting aside the psychological effects of trading, so that by themselves when they experience a loss there will be a sense of loss in trading spirit. This loss of trading spirit is what makes traders slowly leave the world of trading. Even though you can manage your psychological condition by trying to accept losses and repay them through new trading, so you will not participate in losses.
Fatal Mistakes – Taking Big Risks
In money management, we try to reduce the level of risk to a minimum. But what happens if you dare to take a big risk in trading? For example you can bear a loss of 300 pips just to get profit 30. Another example you trade without a stop loss .Sometimes making a decision without a clear data base will put you at greater risk. Avoid making gambling decisions because forex trading is not gambling.You can’t just depend on luck.