(level 1) 5 Ways to Avoid Losing Money Trading Forex
learn how to avoid losing money trading forex.This article looks at the most common reasons why professional and new traders lose money on the forex market.
1. Over leveraged - Leverage is a two way street. The brokers want you to use high leverage because that means more spread income because your position size determines the amount of spread income; the bigger the position, the more spread income the broker earns
2. Stop Losses � Putting tight stop losses with retail brokers is a recipe for disaster. When you put on a trade, commit to a reasonable stop loss limit that allows your trade a fair chance to develop. .
3. Knowledge Deficiency � Most new forex traders do not take the time to learn what drives currency rates (primarily fundamentals). When some news or a statement is due out, they close out their positions and sit out the best trading opportunities; they are taught to only trade after the market calms down. So essentially they miss the whole move and then trade the random noise that follows a fundamental price move. Just think for a moment about technically trading the aftermath of a price move; there is no potential.
4. Relying on Others � Real traders play a lone hand; they make their own decisions and don�t rely on others to make their trading decisions for them; there is no halfway; either trade for yourself or have someone else trade for you.
5. Overtrading - Trading often with tight stops and tiny profit targets will only make the broker rich. The desire to �just� make a few hundred dollars a day by locking in tiny profits whenever possible is a losing strategy
3. Knowledge Deficiency � Most new forex traders do not take the time to learn what drives currency rates (primarily fundamentals). When some news or a statement is due out, they close out their positions and sit out the best trading opportunities; they are taught to only trade after the market calms down. So essentially they miss the whole move and then trade the random noise that follows a fundamental price move. Just think for a moment about technically trading the aftermath of a price move; there is no potential.
4. Relying on Others � Real traders play a lone hand; they make their own decisions and don�t rely on others to make their trading decisions for them; there is no halfway; either trade for yourself or have someone else trade for you.
5. Overtrading - Trading often with tight stops and tiny profit targets will only make the broker rich. The desire to �just� make a few hundred dollars a day by locking in tiny profits whenever possible is a losing strategy
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