10 Common Mistakes You should avoid
So, you have made the decision to start trading online. Congratulations! You are about to embark on an exciting journey. There are, however, certain obstacles with which you should acquaint before opening your first trade. Trying anything for the first time may lead to unfortunate mistakes, especially when you trade forex. After years of training and educating new traders from all over the world about the foreign exchange market, we have found that most newbie traders usually make (and often repeat) the same mistakes. We believe that if you are aware of these in advance, perhaps you’d be able to avoid them.
Once your trade is set in motion, most market experts will tell you to let it take its course. New traders, however, are prone to make rash decisions if they think a trade will not work in their favor. They will then quickly close a position before it reaches its closing point in hopes of saving themselves from a losing deal. What they do not seem to realize is that an asset’s value will edge higher and lower during the timeframe they had chosen, so there is really no way to tell whether the position will go as planned or not right off the bat.
As a trader, you should do your best not to succumb to anxiety over any indication of a position going bad while trading forex online. No one’s trading career is smooth sailing from the start, so take a deep breath and let your trade do its thing.
Going against Your Broker’s Advice
If you are lucky enough to trade with a brokerage that provides you with private training sessions with an analyst or trading expert, then you should heed the latter’s advice. You might feel tempted to heed the advice of another source such as a news outlet, but you should be able to trust your portfolio manager. This person is likely to have years of experience under his or her belt and is proficient in analyzing the global market. Listening to them is likely your best chance of executing a successful trader while you are still new to the market.
Some traders come into the market thinking they are more knowledgeable than the very veterans around them. That sense of superiority comes from a place of misplaced pride which would only work against them at one point or another. If you feel like you cannot trust your portfolio manager for any reason, feel free to contact us and we will match with one of our top brokers.
Making up Your Own Forecast
So, you have watched a training forex video tutorial or two, and now you might think that you know how to analyze the market? Some newbie forex traders definitely like to think so. In reality, knowing how to conduct proper fundamental or technical analysis takes practice and learning from actual market professionals. While it’s great to have such a sense of confidence as a forex trader, you should probably pace yourself.
Acting from that same place of pride we have mentioned above is never a good idea, as it could hinder you from learning how to do things properly. Instead, we advise you to take the time to learn from your analyst and conduct your own research at the same time. Go to reliable finance-oriented media sources online, and see how each one of them picks apart the event in question. You could always ask your account manager for clarification if you find any clashes in the reports.
Jumping the Gun
Similar to letting your anxiety dominate your trading, setting trades on split-second decisions on a regular basis is not a great forex trading method either. Usually, this course of action leads to uneducated decision-making. This would often result in significant loss of funds from your balance, as you might feel the urge to put hundreds or thousands of dollars on a single trade.
A key part of your role as a trader is not only to make profits but to protect your capital. Trading forex is an art and should be treated as such. While you may feel like you might miss an incredible, once in a blue moon opportunity, that is rarely the case. You are more likely to benefit from trading ahead than rushing over to the trading platform to catch a trade.
How You can trade like a Pro
The first thing you need to remember is that each trader is different and has individual wants and needs. If you come from an analytical background, you may not need to have private training sessions after you know how to open and close positions on the trading platform. If you are new to trading online, however, you may want to get as much information as possible from your personal analyst, as well as various guides.
At CM Trading, we will help you choose the account type that will best serve you as a trader. Check out our account types here!