Every single day the number of retail traders in the financial industry is increasing at an exponential rate. Most of the novice trader consider forex trading as getting rich quick scheme. They simply jump into the online trading community and start to trade the financial assets in the market without having any proper knowledge about the financial sectors. But in order to trade the market profitably, you must have a valid trading strategy. If you look at the professional traders of CornèrTrader than you will see that all of them have spent many years in mastering the art of trading. If you truly want to become professional traders than you should learn about the major three types of analysis in the market. Once you learn them you should execute your trades based on those sets of analysis. Most of the new traders make some common mistakes in forex trading. In this article, we will discuss 5 most common mistakes made by the novice traders.
Overtrading: Overtrading is one of the most common mistakes made by the novice traders. They simply think that the more they will trade the more money they will make. But when it comes to real life trading over trading simply increases your losing ends in the market. So make sure don’t over trade the market at any time.as a new trader, you should focus on high-quality trade execution rather high frequency. Most of the retail traders in the financial market fails to achieve success in forex trading since they don’t focus on high-quality trades. Always remember that a single good trade is better than thousand bad trades in the market. If you think that you are over trading the market then making specific rules in your trading system. No matter what happen don’t execute more than 3 trades in a single day even after having three consecutive loss.
Ignoring the fundamental facts: Trading should be based on three major types of analysis in the market. Most of the novice traders in the financial market often trades with the technical knowledge. But in order to take the best trades in the market, you must know how to do the fundamental analysis. Fundamental analysis is often considered to be the most powerful price driving catalyst in the forex market. Even the long-term prevailing trend in the market often gets changed during the event of the high impact news release. It’s true that learning the art of fundamental analysis will take some time. But if you are truly committed to mastering the art of forex trading than over the period of time you will know how to do the fundamental analysis precisely.
Using the smaller time frame: If you trade the market using the smaller time frame than chances are very high that you will be over trading the market. Trading the smaller time frame generate lots of false signals in the market and ultimately you end up by executing low-quality trades in the market. As a professional trader, you should always do your technical analysis in the longer time frame. Always member that higher time frame will give you much better and accurate trading signals in the market. So try to develop a trading habit by using the higher time frame. But to be honest in order to trade the higher time frame in the market you will need to show a great deal of patience but at the end, the patience will get its own reward.
Trading with emotions: This is one of the most dangerous mistakes that every notice traders in the financial market make. If you trade the market with your emotions than chances are very low that you will remain profitable in the market forex market. In order to remain consistently profitable in the forex market, you should trade what you see in the market. As a trader learn how to control your emotions in the market. It’s true that it will be very hard for you at the beginning but if you don’t learn how to control your emotions then you will never be able to succeed in this industry. All the professional traders in the forex market knows how to control their emotions and trade the good setups.
Lack of risk management factor: If you want to become professional traders in the forex market than it is extremely important that you execute your trades in the market by following proper risk management factors. As a trader, you should have your own risk tolerance level and based on that you should execute your trades in the market. As forex traders, it’s inevitable that you will have some losing trades in the market and the risk management factors will allow you take manage losses efficiently. If you look at the professional trader’s trade history then you will see that they often have too many consecutive losing trades in the market but all of them are managed loss. To be precise as traders you should learn how to manage losing orders in the market.
Summary: Trading the forex market is not at all easy. In order to make a profit by trading the financial instrument, you need to do pin perfect execution of your trading plan. Always focus on high-quality trade execution in the market and don’t over trade the market. If you over trade than you are simply increasing the risk exposure in the forex market. And when you do technical analysis always use the higher time frame and try to execute your orders in favor of the long-term prevailing trend. Last but not the east always follow strict risk management factors in your trading career.