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Maximise profits and minimise loses. That is the Holy Grail of Forex trading. However, the implementation of these words although simple is not easy. Unless the trader develops the correct mindset, it will be impossible to be successful in forex trading. The following is a list of some of the commonest mistakes made by traders who are growing their Home Forex Business.
Firstly, just a couple of points. I hold my hand up, I made every single one of these mistakes more than once, and not only in the first few months of trading. So on the principle that if it hurt me, then it may hurt you; these points may be of assistance to you.
Secondly, no matter how long you have been trading, the market will not respect you any more, no matter how successful you are. That is why sometimes experienced traders will make these mistakes. That should encourage us, but at the same time serve as a warning. The most important skill is to be able to recognise when you fall into these traps.
This article discusses three of the common mistakes that traders fall into.
1. Jumping out of profits to early and losses too late
When I started, having read all the marketing ads, I was convinced I should be able to make 20-30 pips a trade. After losing a fair bit of money, I decided to try to make 20-30 pips per day. That still did not make me money. Eventually I settled down to 6 pips a day which equated to a growth of 1% a day. However, I still lost, because although I was making 6 pips a day I was regularly staying in losing trades more than 20 pips. You don’t need a calculator to see where I went wrong. Now losses are inevitable in trading, big losses are avoidable with an appropriate strategy.
2. Trading without a stop-loss.
Nowadays I never, ever trade to my stop-loss. I never set my stop-loss at the price that I wish to get out of a trade. For me the stop-loss is set to protect my account when for whatever reason I am not able to be at laptop or in case for some reason I lose internet access. There are many horror stories of people losing vast sums of money because they never set their stop-loss, moving the stop-loss in the hope that the market will turn in your favour is another area where many people lose money. The only acceptable move of a stop-loss is to lock in ones profits.
3. Over-trading
Over-trading covers both too many sequential trades in a day as well as too many simultaneous trades.
There is a great buzz, a rush when a trade develops in the way that we expect it too. You feel invincible with the currency trading skills of George Soros! However, one of the most important pieces of advice that I have ever received is not to chase the trade but let the trade come to you. Now that at times is easier said than done. It is all too easy to try to look for trade after trade after trade. Avoid this temptation.
Too many simultaneous trades also is a problem. It is important to be able to keep an eye on all the open trades, to check on exit points, to look for the signs that will indicate to you that there are potential changes that will affect your trade. This is very difficult to do when 3 or 4 short terms trades are open. One of the things I have noticed is that reversals and retracements take place much quicker than normal movements.
By being aware of these three common mistakes, the trader will position himself in a strong position to be successful in running a home forex business. These and other lessons were all learnt whilst trading alongside experienced traders and can be learnt by anyone.
Kaz Kowalski has been providing specialist project management support on a number of high profile projects in blue chip companies across a variety of industries including Banking, Information Technology and Telecommunications. This experience has proven valuable in evaluating various marketed income streams. He strongly believes that running a Home Forex Business is one of the most satisfying and profitable means of achieving financial freedom.
For information on how he learned to become a successful trader please click on http://www.Home-Forex-Business.com.
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