Many traders enter the forex market with the best of intentions only to suddenly experience an emotional meltdown as soon as it’s time to enter a trade. We’ve all been there, armed and ready with the best forex trading strategies and techniques, but as soon as you enter the trading platform and begin trading, something compels you to act against your best interests. This encourages traders to fall into the same trading traps and ultimately wipe out their forex trading account balances.
Some of the most destructive FX trading behaviours are outlined below.
- Trading without Knowledge
There are endless educational resources available to enhance your trading knowledge. It’s critical that you enter the trading platform armed with as much knowledge, experience and information as possible; otherwise you will quickly burn out and lose money.
Find a strategy that suits you and stick to it. Don’t overload yourself with information; instead, find a trading system that you are comfortable with and that you fully understand. This way, you will stick to your trading plan and generate stronger profits.
- Ignoring Stop Losses
Stop loss orders are vital risk management tools that stop you from wiping out your FX trading account balance in one fell swoop. Ignoring them is destructive behaviour that sets you up major for loss.
Even if you think you’ve just entered the most amazing, profitable trade, all of a sudden a major news release impacts the market, moving your trade completely against you. By implementing a stop loss, you automatically control your exposure to the market and protect yourself from unforeseen events.
- Repeating the same mistakes over and over
Making mistakes on the trading platform is inevitable. We all learn from our mistakes but you should reflect on them and use them as an opportunity to build the foundations of your forex trading career. This will help you to increase your strengths and minimise your weaknesses.
So, rather than falling into the losing same pattern over and over again, take a step back and assess where you went wrong. Use your FX trading mistakes as a time to develop your forex trading strategy and devise a plan. Always record every trading move in a trading journal, and stay organised, patient and objective.