Forex Trading the Right Way – Avoiding Common Trader Mistakes

Forex Trading the Right Way – Avoiding Common Trader Mistakes

The forex market has grown vastly in popularity over the past few years with many new traders entering the fray during that time.  These traders, however, have differing levels of experience and market knowledge and this has led to major differences in the performance levels of average traders.  In the worst cases, traders will repeat similar mistakes over and over again until their entire account value is depleted. But luckily, some of these mistakes have become obvious to more experienced traders and since these situations are now well-documented, it is possible to isolate and remove these erroneous practices so that they do not negatively affect our trading accounts.         

One of the things that separate the forex markets from all other types of traditional investments is the use of leverage to maximize position sizes.  While there are many ways that leverage help traders to achieve substantial gains, there are also significant risks that can be compounded by the common mistakes that forex traders tend to make.  It is important to have an understanding of some of these common mistakes and help to identify ways these typical practices can be turned around so that new traders can stay in the game and become successful traders over the long term.     

Displaying Patience, Rather than Greed

“Since many traders jump right into the forex markets without very much in the way of previous knowledge or experience,” said Haris Constantinou, currency analyst at TeleTrade, “it is generally a wise idea to start trading with a demo account before real money is put at risk in an investment.”  But since most new traders tend to ignore this advice (the allure of great wealth is far too attractive to pass up), any mistakes can become very costly and discouraging.  So, in order to stay in the game and make a successful career or trading, pay special attention to the mistakes traders have made before you so that it is easier to avoid these situations. 

When we avoid losses, we essentially impact our trading accounts in positive ways that are equal to generating gains.  So it can be argued that removing the greed impulse is one of the most important first step that every trader must take before entering into the daily trading markets.  Of course, there is no substitute for education and research.  There is also no substitute for daily trading practice.  This is the only way we can have an understanding of how the market are likely to operate, and how far prices are likely to travel given certain situations.  But money makagement is key as well.  And the simplest methods for keeping for profit and loss expectations in line is to properly manage your greed impulse and ehxibit patience.