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Top 5 common mistakes that every novice traders make

Posted 27-07-2017 at 04:55 PM by ThomasB

The forex market is so huge that every day more than 4 trillion USD is traded all around the world. If you are new to this industry then you will never know how vast the market is and it will take a decent amount of time to understand the market natures. Trading is an art and not many traders can actually master it. If you want to lead life by trading then you can easily do it by learning it all the basic details of this forex market. But there are some things that you need to overcome. Most of the traders in the retail industry tend to lose all of their trading capital due to some basic mistakes and the professional Aussie traders often call them the deadly mistake. Learning the art of trading is easy but following strict trading, discipline is extremely difficult. Today we will discuss the top 5 common mistakes that every novice traders make.

Executing too many trades: This is often known as overtrading. Overtrading is one of the deadly mistakes which can ruin your trading career. Experienced traders trading with Saxo always gives advice to the new traders to trade only the high-quality trade setup. But when it comes to real life trading the novice traders think that the more they will trade the more money they will make. And for this reason, randomly execute their trade and loses money.

Trading against the trend: There is saying that the trend is your friend. If you want to succeed in this industry then make sure that you are always trading in favor of the long-term trend. The novice traders in the financial industry always tend to trade the reversal which is extremely risky. Even though some professional traders trade the reversal but as a newbie, you should always trade along with the trend to reduce your risk exposure.

Using too many indicators: Indicators are considered to be the helping tools for the traders. But there are some traders who often use too many indicators in their trading platform in order to find the high-quality trade setup. But indicators should never be used to find quality trades rather they should be used as a trade filter. And always use one two indicators in your trading and keep your trading chart clean so that you can really understand the price movement of certain assets.

Trading the News: News trading is only for professional trades. As a new trader, you should never trade the high impact news release. Most of the time the market becomes extremely volatile and it becomes extremely difficult to place quality trades. Even the spread also widens during the heavy impact news release. So if you think that you make a huge amount of money by executing your trading during the volatile market conditions then you are completely wrong. It needs an extreme level of practice and year so experience to trade the news. However, if you still want to master this art then you can use your demo trading account to develop a perfect news trading strategy. But no matter what you never trade the news with your real money unless you know what you are doing.

Risking too much: Most of the novice traders in the financial market blows their entire trading account due to poor money management. In the eyes of trained professional perfect money management plan is often considered to be the Holy Grail in the forex trading industry. Being new to this industry, you should never risk more than 1 percent in any single trade regardless of the quality of the trade setup. Try to use price action trading strategy since it will give you precise stop loss when you place the trade. If you lose too many trades then never get frustrated rather stick to the 1 percent rule and aim for high-risk reward ratio trades.
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