Avoid Newbie Forex Trader Mistakes

Our Forex Signal Trading Team has many years of Forex trading experience. We hope to share with you a few newbie Forex trading mistakes that we have observed over the years, to help you never trip over these dangerous Forex traps.

Mistake: Never Add To A Losing Position.

One of the worst mistakes traders make is the continual buying of a losing position. They will typically justify it by saying they are just “averaging” in to get a more favorable price, in the mistaken hope that the market will now reverse in the right direction. In reality they are dooming themselves to failure by putting too much at risk and adding to a losing position.

There is no room for too much pride in Forex trading, and when your trade is wrong; humbly accept it and don’t add to it.

Mistake: Chasing. A Bad Idea.

It is 1:00am and you see a nice trade setting up on your charts. You mark it down in your notebook and decide to trade it tomorrow if it sets up. When you wake up the next morning, you see the trade did exactly what you thought it would and the pair is now 150 pips past your entry. What do you do? Inexperienced traders can’t stand the fact that they missed the trade and will enter the market regardless of the fact that it has gone many points past their entry point. The result is typical. They end up getting in just as momentum changes and incur large losses. Markets are always moving, especially in foreign exchange. Missing trades is a part of trading, accepting it and having the discipline not to chase will save you grief and money.

Remember that good trading opportunities are available all the time, especially in the Forex market.

Mistake: Holding On To a Losing Trade

Many newbie traders will enter a trade without a stop loss, or when they see the market nearing the stop loss level, they change their stop to be larger to avoid being stopped out. Continually doing this is obviously detrimental to you and your account balance. Fear of losing money and irrational hope that it will rally back to where you bought it kept you in the trade. Instead, stay rational and know your exit levels on each trade, and stick to them!

Good traders condition themselves to get out of a losing trade and always trade with a stop loss.

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