Top four common mistakes in currency trading business
Everyone thinks trading is the easiest profession in this world. The rookie traders fund their trading account with great hope to change their life. After trading the real market for a few months, they lose a big portion of their investment. Trading is a very complex task. Unless you educate yourself properly it will be nearly impossible to make a profit from this market. Start with the technical details of this market. Once you feel comfortable with your technical analysis skill, focus on the fundamental factors. Based on these two sets of skills, you need to develop your trading strategy and trade the market with proper discipline.
Even after following all the basic rules of trading business, the majority of the retail traders still loses money. Let’s discuss the four common reason for which the retail traders are losing money in Forex.
Trading with emotions
Emotions have no place when it comes to the retail trading business. You have to focus on technical and fundamental details to find the best possible trade setups. You might think controlling your emotions is a very easy task. But if you lose a few trades in the real market, you will understand the complex nature of this business. It’s really hard to make a profit from this market based on a simple strategy. Majority of the retail traders fails to control their emotions and eventually lose money. Be prepared to embrace the losing trades and eventually you will become successful at trading.
Trading with the low-end broker
You must trade the market with a well-reputed broker or else it will be nearly impossible to make a profit from this market. You must find the best Forex broker Australia to ensure premium trading environment. Some of you might think the low-class brokers are the best solution for your trading career but it’s not. Though the low-end brokers will offer you different bonus amount eventually you will face many technical difficulties. To avoid such problems you need to find brokers like Rakuten where you can do the perfect market analysis with an extreme level of ease.
Trading the high impact news
The rookie traders always execute trades before high impact news. They think this is the only way to make a profit from this market. But if you dig deep, you will understand the key reasons for which the novice traders lose money in news trading. News trading is only for experienced professionals. It takes years of practice and complete knowledge of fundamental and technical analysis to filter out the best trades during the extreme market condition. Being a new trader, you should stay in the sideline during the major news release. Open a demo account to practice news trading. Unless you feel comfortable with your demo trading performance you should never trade the major news.
Trading against the major trend
Every trader know the fact, trend trading is the only way to make a profit. But do you know the proper way to find a trend? The rookie traders analyze the market data in the lower time frame and eventually lose a big portion of their investment. After blowing up their trading account they blame the market. But if you analyze the data in the higher time frame, you will realize the fact, you are trading with the market retracement. Stop thinking about the complicated trading system to trade with the major trend. Use the most recent swings of the market to find your trend line. Once you have drawn the trend line, wait for the price action confirmation signal to execute the trade. Though this strategy is very profitable, still you need to stick to the basic rules of investment. Never risk any amount which you can’t afford to lose. If possible risk only 1% of your account balance since it will help you trade the market in a stress-free environment.