Why Forex Traders Lose Money: Mistakes that a Trader Makes When getting started in forex trading, there are common mistakes to be avoided. This is a list of common forex trading mistakes.
Key Points
1.Using Too Much Leverage
One of the biggest advantages of forex trading is the ability to use leverage, or trade on margin.
One of the most common mistakes that forex traders make is using too much leverage. Using too much leverage is when you have a small account balance but make a big trade. If the market moves against your position by just a small amount, it can result in large losses. Commonly, beginning forex traders will get emotional and nervous and close the trade for a sizable loss.
2. Overtrading
Overtrading occurs when traders try to look for trading opportunities that are not really there.
It happens to new traders very often, because they just want to trade.
The result is usually a poorly executed trade that results in an eventual loss. Overtrading can also result in traders making too many trades at once and using too much margin.
3. Choosing the Tops and Bottoms
Many new traders attempt to try to pinpoint where a currency pair will turn around and start moving in the opposite direction. This is something that is difficult even for professional traders.
4. Shopping Systems on the Internet
In their desperate search for the perfect forex trading system, traders scour the internet at all hours of the day and night. The problem is that it simply doesn’t exist. Most of the time,
it’s just a good way to part with your money and think that it’s for a good reason.
