11 Mistakes Made in Trading
- March 28, 2022
- Posted by: Nancy
- Category: Education
The forex market is the foreign exchange trading market with the highest international transaction volume. Forex markets offer the opportunity to open high-volume transactions with small collateral thanks to the leverage opportunity. They are an attractive market for investors thanks to platforms that are easily accessible and have a practical interface. However, before investing in the forex market, one should understand the market logic very well and minimize the portable risk. Otherwise, unconscious trading without understanding the working logic of the forex market can lead to sad results. In this context, let’s briefly examine the mistakes made in trading that you should avoid.
1. Don’t Trade High Volumes!
Especially if you are investing in speculative instruments, you should check the ratio between your total margin and your collateral in the transaction. Opening a position with all of your collateral will cause losses if the transaction is contrary to your expectations.
2. Be at the Right Time and in the Right Place!
As Down theory accepts, prices always move with a trend, and market participants are included in this trend at certain times. However, there are many corrective movements (Minor Trend) in a product with a certain main trend. If the expectation is that the price will rise, taking a long position from the point where the price peaks will not be the right strategy. Taking a position in response to purchases after a short-term decline will both increase the level of profitability and not force your free collateral.
3. Take Your Profit, Don’t Forget to Cut Losses!
Regardless of the direction of the position you take, you should not ignore the possibility that the price may go in the opposite direction of your expectations or the possibility of profit realization at the target price level. Therefore, you should determine a bearable loss level and an acceptable profit level.
4. Don’t put up with the Positions at Loss Any Longer!
Prices may move in the opposite direction of your expectations. So, if you do not predetermine the level at which you will exit the position in a loss and if you carry your losses for a long time with the expectation that the market will turn in your favor, you may experience significant losses in your collateral.
5. You Can’t Stay in the Snow Forever!
Although the instrument progresses in line with your expectations, you should take into account that prices may vary depending on the intensity faced by buyers and sellers in each market, and both parties will be satisfied at certain prices. The expectation that the price will rise forever may not be realistic.
6. Do You Trust Your Market Knowledge?
Making an investment decision without knowing how the Forex markets work, which country’s currency is the instrument you follow, and macroeconomic and technical information will not yield results that meet your expectations.
7. Don’t invest without Determining a Strategy!
Positions without an investment plan can cause losses and new mistakes with deteriorated motivation. For this reason, before making an investment decision, you need to determine the target price, investment period, and collateral to be allocated for the investment, taking into account your leverage ratio.
8. Stick to Your Strategy!
Do not change your strategy if your position exceeds your take profit and stop loss levels, either positively or negatively, thanks to the knowledge and analysis you have while trading in Forex. The product you follow may be subject to price attacks for any reason. In this case, closing the trade early or opening a new position in panic will open the door to new loss levels.
9. Don’t Listen to Manipulations!
If you are entering a position with transactions that are considered to be market disruptors or with the information you get from sources that do not have the necessary knowledge and skills, there is a high probability that you will be wrong.
10. Do You Have Enough Experience?
Even if you feel that you have enough knowledge and experience, starting professional investments without making sure that you have created a profitable enough strategy with trial accounts can bring losses early.
11. Don’t Let Your Emotions Take You Over!
When trading in the Forex market, you should be cold-blooded, along with having knowledge, equipment, and strategy. Generally, investors who are just starting out and cannot act calmly may act hastily to take a position or make wrong decisions by panicking over instant price changes. For this reason, in order not to lose in the forex market, apart from knowledge and experience, psychology management should be done effectively.
You may want to read 7 Psychological Trends Forex Investors Should Avoid