Many investors think that making mistakes is a big deal in Forex. But, mistakes are not always bad. Sometimes, these will make you realize that you are going in the wrong way. However, if you start to make mistakes all the time, you will face big problems. Because these will slowly decrease your account balance. So, as a trader, you need to understand what types of mistakes you are making and why you are making these. When you will know about these, you can find the solutions.
In this article, we will discuss the Top 5 Blunders of New Forex Traders. These will help you to identify your errors.
Table of Contents
Have no trading journal
Most of the investors do not make the trading journal. But, they need to know what they have done in the past so that they can improve their present situation. If you ask traders about their previous activities, the majority of them will not give you any answers. However, professionals are totally different from them. They keep their previous record for becoming victorious in the trading field. As a trader, do not think that you do not need any journal because without keeping this, you will never measure your performance.
Fail to adapt
Traders need to adapt to different circumstances so that they can get the advantages. If you can’t cope up with the situation of the market, you will not apply your plan properly. This will happen because you will not understand the total scenario. Sometimes, you will see that the market is not going like the previous time. In this position, you have to adjust to the changes. If you are unable to make the changes, you might not stay in the market for a long time. When you trade commodities, think about the worst outcome. This will allow you to trade with low risk and eventually you learn to sync with the market.
Not paying attention to the correlation
You have to conscious about the correlation of the financial instruments. You may think that if you invest your money in different instruments, you will not face any severe loss. But, before doing, this, you need to do the proper analysis. Otherwise, you will go through a tough situation. If the instruments are related to each other, remember that you are just increasing your risk. Try to diversify your portfolio. Actually, you need to know about every instrument which will help you to know about the relation between the trading instruments.
Start revenge trading
Investors do not start revenge trading. By doing this, they will be harming them. Before opening a position, you must know that you can’t beat the market. For making profits, you have to go with the trend of the market. Revenge trading refers that you are increasing your chances of losing money. When you face failure, you become to lose the power of thinking properly. At this time, you can’t keep your mind stable. But, for taking a better decision, you have to refresh the mind. So, after losing money, try to take a break from the market to find out the reason behind the failure and modify the plan.
Using mental stops
Mental stops do not make any sense for the traders. If you think that without using the stop-loss order, you can limit your loss. This is wrong. Without using the stop-loss, you can’t minimize your loss. For maintaining the risk-reward ratio, you need to use the stop-loss and take profit.
Newcomers make several mistakes in trading. They can’t filter out the best trades and face huge problems. You need to realize that you are making errors. But, many investors do not want to accept this thing. For this reason, they do not take any proper steps for reducing their errors. If you go with your plan and do not make any steps based on your emotions, you might not make any big mistakes.