Forex trade is not a gamble. It should be treated with lots of caution and seriousness. It is unfortunate that most individuals who do not understand how the forex market operates flock to the market and start trading without having the right forex knowledge. As a trader, you are susceptible to making mistakes regardless of the trading techniques you choose to utilize for your trades.
Beginner traders have difficulty making it in the forex market given the numerous trading mistakes they commit. That can be explained by the following factors, which contribute largely to the beginner traders quitting the forex market before they can even start.
1. Not Carrying Out Prior Research
Operating the forex market blindly is not recommended as it can result in wrong decision-making. Therefore, as a beginner trader, you need to carry out lots of research, for example, from a company website, to know the behavior of exchange rates. Exchange rates vary with time and are mostly influenced by the extent of the supply and demand of currencies in the market.
Also, certain news when released to the market can influence the movement of the exchange rate. Hence, carry out proper research before committing your money to a given trade. As a beginner trader, keep yourself up-to-date on what is happening in the market to avoid making wrong trade moves.
2. Not Following a Trend
It is advisable to follow a trend regardless of whether it is right or wrong. Trends influence the supply and demand for currencies in the market provided that most if not all traders follow it. Hence, failing to follow a trend just because you do not agree with it may result in a very bad trade experience for a trader. A great example is the BREXIT, which influenced most traders’ decisions on Beginner traders should look into the market to pick any trend that is ongoing.
3. Trading Currencies Not Known to Them
This mistake happens often when the currency in question has a very commendable trade history. Let us say the currency in question yielded significant payoffs in the past, some traders, especially beginners may think of investing in the same with the hope of reaping large. However, this may turn out to be losing trades. What the traders do not understand is that the circumstances have changed, and the currencies may have paid off because of some other underlying factors. Hence, stick to the currencies you are familiar with when trading. Going for unfamiliar currencies is a wrong move.
4. Lack of Weekly nor Monthly Targets
Setting targets is vital as it acts a source of motivation for the trader. Trading without specific targets in mind can result in a demotivated spirit that may end up giving up on the trades. Having set a goal and achieved it will help in boosting your trading spirits as you are able to apply the strategies you used in the winning trades you have had before to boost your other trades.
Also, having a target as to the number of trade losses you are willing to accept on a given trading day will save you from losing so much. If you are having a bad day where all your trades are losing, the trade target will save you from losses that are associated with additional trades in a day.
5. Leverage
Leverage is a trading loan that traders obtain from their brokers. Often times, a broker will provide a trader with a loan to trade with so that they can get a commission from the payoffs in the event the leveraged trade wins. If the trade loses, then the traders will have the account wiped out by the trade. It is therefore advisable for beginner traders to only utilize their funds and not rely on leverage for their trades, in a period of six to twelve months of their trade.
Conclusion
Beginner traders are new in the forex market and must abide by certain rules to ensure they succeed in the trade. For instance, they should learn to follow trends, carry out good market research, avoid leverage, trade with known currencies, and set achievable targets to work with.
