Frequently Mistakes in the Forex Market

Here below a list of some oversights (of course not all mistakes possibly done by traders) that are often made by traders whether intentional or not.

  • High Volume Operations: Leveraged transactions require a different risk perception than in the spot markets. The proportional difference (leverage) between your transaction size and your master is a factor you must consider. Taking positions using the whole or the majority of the capital in the Forex market may cause you to lose your capital in a short time.
  • Determining Levels of Profit and Loss Stop: As it should be, if we are moving within a strategy, we have a target price when we are in position, and in case the risk is realized, we determine the price at which our position will be closed, how much loss we will incur, and profit and loss stop orders.
  • Carrying the Position in the Loss for a Long Time: If we do not determine the level of loss in advance and we are carrying our losses for a long time with the expectation that the market will return to our favor, our capital can dissolve to a great extent.
  • Getting out of the profitable position in a short time: As an investor, the reason for our loss is the profit expectation and we want to maximize our profits. Otherwise, we cannot finance our losses and we will have to witness that our portfolio is shrinking. If we don’t want this to happen, what we have to do is to wait as long as we can in our profitable positions, to move our stop orders into the appropriate level, and to use the loss stopper on the trail (trailing stop).
  • Making Emotional Decisions: All traders are expected to be free of emotions without exception for a forex trader and the hardest part is always to make isolated decisions from emotions. We will be successful to the extent that we can maximize it.
  • Making Transactions to Be Done: Trading in financial markets is a serious business that requires attention. Rational investors are aware that non-serious transactions will not offer regular earnings.
  • Makingvery short- term transactions: It is not difficult to build a system with very short-term forecasts, but it is a very difficult and stressful task that requires follow-up for any investor.
  • Making an action without gaining experience: Starting a process without creating a profitable strategy with trial accounts can be the most costly way to learn how to trade.
  • Transacting Based on Single Indicator Reference: Only single indicators are not sufficient references for buy-sell. Indicators are used for confirmation purposes when entering the position after the line-up analysis.
  • Unplanned Action: All movements in the market are assumed to be irrational. In such an environment, one of the important requirements of not losing is to have a plan.
  • Not Stopping the Stop Level: If we change the stop level because we are afraid to face a growing loss, this may be a harbinger of greater damage.
  • Acting independently of the strategy : The most important part of a strategy is a loyal practitioner.
  • Very Frequent Processing: High transaction costs means high risk. However, frequent transactions can be exhausting and stressful for the investor.
  • Moving with sensations : If we are just entering the position with sensations we are very likely to be wrong. Rational decisions need to enter the position.
  • Opening a position within sufficient informatioIf we think that we have insufficient knowledge, we should practice until we feel sufficient and we should get support from others for our deficiencies.
  • Excessive self-confidence: It is desirable for the investor to trust him / herself, but it causes us to not be able to analyze our overconfidence errors and not to accept that we can be wrong.

 

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