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Some of the Mistakes and Misconceptions Forex Traders Make-Part II

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In part I, we looked at some of the common mistakes and misconceptions which included not having a sound understanding of risk/reward, failing to understand position sizing, lack of a trading plan and emotional trading. In this article, we look into other common mistakes and misconceptions that cause a vast majority of Forex traders to lose money in their trading. It is of paramount to avoid these mistakes so that you can trade profitably and successfully in the currency trading.

Gambling Instead of Trading Responsibly

 

Some traders find themselves in a cycle of gambling as compared to responsible trading. The sooner you realize that you are in some sort of gambling cycle the better so that you can pull yourself out of this detrimental situation to start trading consistently and profitably. You should put strategies in place so that you can manage your risks amicably. Forex traders who manage their risks well are the ones that make the most cash out of the Forex market.

 

Not Exercising Patience

 

Patience is usually scarce among novice Forex traders because most of them approach the Forex market from wrong perspectives. Some individuals are attracted to Forex trading because they think that trading in currencies will fix their life by giving them substantial amount of money they so direly need. This makes most traders to trade with their emotions as compared to analyzing things carefully before starting trading. You should only trade with money you can afford to lose. Once you begin approaching the Forex market from a right perspective then you will start to exercise patience and this will significantly improve your overall winning %. This will eventually make you more successful and profitable in your trading. When trading in the Forex market, you have to look at the bigger picture and not just trading because you have cash in your account and some free time. You should only engage in trading activities that will give you value for your money as well as time.

 

Over Trading

 

The fastest way to becoming a full-fledged emotional Forex trader is over trading. It is advisable that you use quality time in demo trading before indulging in live-market trading. Traders who quickly jump into live-market trading usually find themselves over trading because they have not perfected the art of Forex trading. You should only enter a trade after a sound reasoning of your actions.

Obsessed with Winning Always

 

Most Forex traders are obsessed with winning always and in the event they make losses, the discipline to trade breaks down. If you hold onto losses in the market then soon you will be forced to close your account since you will have nothing left in your account. Always keep your losses at minimal levels and before you move to the next trade, take time and analyze what went wrong before jumping into the next trade. Your winning trades should be much far bigger as compared to your losing trades.

 

Complicating Your Trading System

Forex trading is not as complicated as many perceive it to be. Forex trading is indeed easy to learn and win; you only require a simple trading system. A simple system is easy to learn and use while a complex system will contain many elements that will end up breaking resulting to lose of your hard-earned cash.

 

Forex Trading Robots

 

Forex trading robots are not a guarantee way of making money in the Forex market. Some traders believe that for them to make substantial amount of money in the financial market then they have to use trading robots; this is not true. Trading robots can help make you money but at the same time can see your downfall in the Forex market. If must use them, you have to ensure that you use them carefully for your benefit and not detriment.

 

Having debunked some of the common mistakes and misconceptions about the Forex market, I believe that you will succeed in your trading. Take time and learn as much as you can before risking your hard earned cash trading in currencies.

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"...complicated trading system''

....Simple is always better than complicated. Be careful with too much theory.

Einstein once said: “If you can’t explain it to a six year old, you don’t understand it yourself.”

Learn how to explain anything in a simple manner

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I would also say Lack of a Trading Plan and Market Forces

Real-life Forex trading is much different to demo trading or any other simulated programs. It will be a whole lot different scenario, when real-money is involved. Knowledge of Forex market forces, currency pairs and their relationship to other currencies, nations and their policies, and major fundamental and technical indicators are important prerequisites for a sound trading plan. Many new Forex traders do not have any plan at all for placing stop-losses and orders; in fact many of them entirely rely on the automated procedures of their trading software.

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Failing to plan is planning to fail...lack of a trading plan can make a Forex trader fail to reach his goals in his trading. For a trader to break even and even make a substantial margin, he should have a proper and well crafted trading plan

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Leverage is a tool that can generate really interesting earnings for all those who make Forex trading. In other words, it's like a lens which amplifies positive or negative effects of changes in exchange rates. With the leverage, you can move amounts of money considerably higher than your actual investment, even exploiting the smallest pips movements. Forex leverage is an excellent tool to make good gains in the currency market. To succeed, you must always use great caution and thoroughly study the foreign exchange market.

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