Common Mistakes Forex Novices Make

Common Mistakes Forex Novices Make

Common Mistakes Forex Novices Make

Most novices fail to realize that they face quite a steep learning curve in order to master the complexities of Forex. Many new traders are attracted to Forex by its constant publicity proclaiming that it is a source of extensive and easily-acquired rewards. Consequently, they are not properly prepared for what lies ahead of them. For instance, even if they do possess a Forex trading strategy it could well be inadequate. In addition, they do not appreciate that they must focus on risks first before profits.

Forex novices also have a strong tendency to overtrade because they have not developed any feel for risk and money management concepts. Consequently, they do not realize the importance of restricting their risks to just 2 percent of their total equity per trade and, unfortunately, lose their entire account balances within months after startup.

They enter Forex trading with this mentality because all the associated advertising has misled them into believing that they achieve significant financial returns by just enrolling with a Forex broker and opening an account with only a few hundred dollars. However, if you do equate with these symptoms then you must quickly understand that FOREX trading is a complex business and that you must adopt caution until you acquire proficiency at this type of trading.

In reality, you will discover that very few Forex traders achieve any degree of success and that most novices succumb to one or more of the following failures:

1. They do not take Forex seriously enough by trading in a business-like manner.

2. They gamble by overtrading in an attempt to make significant profits because they do not understand the concepts of leverage.

3. They do not spend enough time mastering their Forex craft using a demo account and instead risk their own money far too soon.

4. They are under the impression that all their trades will be successful. Instead, they need to learn how to design a Forex trading strategy exhibiting both a positive win-to-loss ratio and expectancy value.

5. They trade money that they cannot afford to lose because they have little or no understanding of the importance of risk and money management concepts.

6. Novices allow their gut instincts and emotions to influence their Forex trading decisions far too often making erroneous decisions as a result.

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