Did anyone tell you that making money in forex is about avoiding making mistakes? I am sorry to say it is not about doing the right things.
Even if you are doing the right things in forex,
you are not guaranteed to make money as forex market is unpredictable. However if you make mistakes while you are trading, you will more than likely to lose money.
Do you understand why most traders cannot make money now? The reason is our optimistic nature does not allow us to focus on avoiding mistakes. We rather look at doing the right things. So if you are not profitable in your trading now, it is time to look at your mistakes. Focus on correcting them today and you will see your trading results improving.
Below are 2 out of 5 common deadly mistakes that you should avoid. Correcting them will shorten your learning curve and accelerate your trading success.
1. Trading on free or paid signals – Following the so called gurus
Sometimes it is tempting to follow the signals from some so called gurus. When they say buy, you buy. When they say sell, you sell. Now I am not saying they are not good but are you able to follow their picks for the next 10 years till you become wealthy.
The problem with following signals is that you cannot miss out on any single trade. The trade you miss could the biggest winning trade of the entire year. This trade could cover up for all the previous losses. Moreover, do you have the discipline or confidence to follow every trade? I am sure you like to have your own opinions about trading and thus you may not follow every trade.
You see trading is about profiting over a large sample of trades. What you need to learn is the strategies they used to trade instead. Then you would have the confidence, discipline and consistent to trade every signal that your strategy tells you.
2. Trading News– Guessing how the market will react
It is true that the currency prices follow the fundamentals of the currencies. Fundamentals do come in the form of news but when the news are out, the market have mostly priced in the news.
Besides that, if market rises or drops sharply after a new, it tends to reverse sharply as well. You could have lost a lot of money if you are on the wrong side. We simply cannot predict how the market will react to the news. I have seen market dropping 200pips these minute and rising 200 pips the next minute. It is like gambling on casino!
So do yourself the favor by not trading during the news hour. There is plenty of chance to make money based on the trend itself. Remember that if you want to make a lot of money in forex trading, you must focus on avoiding your mistakes. It is the difference whether your profits are fantastic or just breaking even.
Now do you understand why most traders cannot make money now? Start taking out your log book now and look at your losing trades. Just imagine not making this mistakes or turning them into profitable trades would mean a few more zeros behind your profits.
Please note that this article is divided into two articles for a quick 5 minutes digestion. You can find the part 2 in my author profile.
