Mistakes to Avoid in Forex Trading
By Angela Sanders Tuesday, April 01 2014 @ 07:21 AM EDT
I don’t know about everyone of you out there, but for me no matter how much I make, my needs seem to grow proportionately with them. Thus, a little extra cash is always appreciated, and presently one of the most common ways of raking up some extra dough every month is trading in the foreign exchange market. But there are some fundamental mistakes that beginners make in the Forex market which can injure their financial capital greatly and defeat the entire purpose of joining the trade in the first place.
What are these traps you ask? Read on for further information.
Wrong mindset – Most newcomers make the mistake of overestimating the reward they can reap from the Forex market at the first go. They treat this trade like a gamble and make gross mistakes in either overplaying their hands or not knowing when to walk away. The Forex trader’s main motive is to preserve his capital as much as possible rather than trying to get rich overnight.
When to quit – This point is a consequence of the point mentioned above. Just as a bad gambler does not know when to walk away, a greedy Forex trader too makes the same mistake. When you see your profits rising gradually; you might feel tempted to hold on a little longer for even better rewards, but the problem is that the currency market is rather volatile. You can never be completely sure of which way it is going to turn tomorrow. So, once you have a made a decent profit, don’t hold on greedily for more. There are many cases where people who could have made a 30% profit ended up making a 10% loss just because they did not know when to let go.
Lack of experience – Gone are the days when you had to enter the market completely green and had to learn your way up the profit curve. Today there plenty of sites which can give you professional advice in this area as well as the much needed experience through demo accounts even before you enter the market. These sites which have a strong Web Presence and IT (Web design) now and can be accessed rather easily. All one needs to do is register in such sites and practice trading with virtual money in a simulated environment. This way a new trader requires the much needed experience without losing out on her capital.
The last point is especially important to pay heed to as it will help any trader ensure a successful stint in the market. What people often forget is that Forex trading requires proper thought, calculation and one’s own well developed pattern of work; a demo account goes a long way here. Taking excessive risk is bad for a Forex trader, but taking no risk at all is also foolishness, what one needs to learn is strike a balance between both; and what keeps one from achieving that is mainly the emotion tied with the hard earned money one has marked as the capital. What demo accounts do is help you get enough practice to devise a successful profit making and loss cutting method, without having to risk your capital.
So go ahead, sign up for such training accounts if you are interested in the trade. Nonetheless, if you are worried about how secure such sites are, do not worry. Most of the business sites today whether they are Forex based or for e.g. marketing based like the MediaGroup Worldwide company are secure authentic hosts. However, if you’re still apprehensive, look for independent reviews on them online.