COMMON MISTAKES TO AVOID IN FOREX TRADING
- 22 Nov 2023
Bernard Baruch, an American financier and Statesman, emphasised that “ In trading, it’s not about how much you make, but rather how much you don’t lose”. Known for its allure and volatility, the forex market generates a staggering revenue of approximately $7.5 trillion per day. However the market is adorned with uncertainties but its lustre makes investors or traders fall in its trap. The experienced traders are no exceptionals either.
NO STRINGS ATTACHED
The very first thing to keep in mind before trading is “not to be attached emotionally”.
It is often observed that the trader gets emotionally attached while trading and stops using rationale. It is always advisable to have a trading plan or strategy before entering a trade to avoid entering into the cycle where he loses his rationale of thinking clearly and defining his risk reward ratio. A proper risk reward ratio depending upon the risk appetite of the trader helps him to get the best possible reward along with the defined and calculated risk.
IGNORANCE IS NOT BLISS
Among the noob traders it has been seen they follow tips and advice from the fin-fluencers. Sometimes, these tips do seem profitable; however relying on them completely is not a good idea. It is always good to do thorough research both fundamentally and technically to have a good overview of the market and the factors influencing it.
ENJOYING THE HIGHS
Some people also like to trade the momentum they have in the time of any event. It is always good to have a strict stop loss and target profit during such cases as these scenarios are very risky.
Also Read:- Leverage In Forex
MARKET IS NOT A GAME OF BLACK JACK
It is a healthy habit to keep a check on the drawdown levels and define the equity levels. One should be mindful while trading as they seem to over trade and exhaust the equity and the leverage provided by their broker. This creates a scene of addiction and gambling. To be a successful trader, you must master your emotions and trade with a plan.
Remember, trading is a business, not a gamble. Treat it with the respect it deserves and you'll be more likely to achieve success.
Approaching the market with a speculative mindset rather than considering it as an avenue for wealth generation without adequate knowledge and skillset is often the issue faced by amateur and professional traders.
We hope you found this insightful! Thanks for reading and stay tuned for more!
- ARPITA SHANKHARI