Making a mistakes are inevitable especially when you try something new. Here is 4 common noobs mistake in forex that might cause you a few thousand dollar.
1. Trade without a solid reason
In my past experience, the day when I started to exposed with forex, I usually hope the price go in my direction. I do believe most of new traders just enter the market based on their instinct. Some a bit advance, may use basic indicators such as RSI and Stochastic Indicators to sell when overbought, and buy when oversold without knowing the fundamental of price action and why the price move.
For experienced trader, they will wait at certain area of the price and have a solid reason to watch on that area before entering the market. Most of them have a very little trade per month,while the noobs will wake up early Monday morning, wait for the market open and immediately buy or sell.
2. Overtrade and Market Revenge
I saw a lot of new traders have this kind of habit to re-enter the market if the market against them. Some of them use martingle and some of them counter order the previous order. Most of the time these habit will cause their account blown in a few minutes.
We understand the psychology in the trading arena are intense. That is why this battle between bulls and bear is not suitable for everyone. Bear in mind that forex market is not quick rich scheme. It is a business. Any business have an opportunity to make you a millionaire overnight, or bankrupt in a second. Even a well prepared forex master suffer a loss in their trading career. No one hold a holy grail in this arena.
3. Not using a Stoploss
Not using a stoploss is a huge NO. Its the same as You let your account have no loss limit. Face it, sometimes you make a mistake trade. Let it hit the stoploss. At least, you still have the capital to enter the warzone again rather than just blowing your whole account.
however, here is a quick tips for those who have a bad habit putting a stoploss and a fans of full margin trade.
If you have $100, only deposit $10 in your trading account. Let the magin call be your stoploss. Go full margin on the trade that you believe is right. If you are lucky, then you may double or even flip that $10 into $100. However, if you lose, you only lose $10 and still have $90 cash in hand. Try to flip that $100 into $1000 and grow from there.
*There is a special forex setup called "compression" where you may grow your account up to 2000% in a few minutes. However, this setup not really common in forex chart.
4. Having Unrealistic Expectation
Making a truckload of pips every single day sounds awesome, but is it possible? Maybe with a great deal of experience and skill thrown in with some luck, but let’s be realistic–that doesn’t exactly describe the typical noob.
By making stratospheric goals, you might be setting yourself up for disappointment. And if you’re disappointed often enough, you might quit trading entirely and miss out on a potentially profitable endeavor.
Instead of aiming for bajillions of pips a day, set realistic expectations and goals and then take concrete steps to enable you to achieve these goals.
That’s it for me today! I hope this list helps you.
I mean, I’m sure you’ll make a lot more trading mistakes – ALL traders make mistakes – but I hope you avoid these common ones.
Good luck and good trading this week!
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