The popularity of Australian foreign exchange transactions has soared to the sky in the past few years, mainly because the foreign exchange market is accessible to general investors and can be traded with peace of mind. But it is also said that aspiring foreign exchange traders have a very high failure rate, with more than 95% of traders withdrawing from the game in the first few years of trading.
Here are the five most common mistakes that 95% of traders often fall into. Hurry up and learn to avoid mistakes and increase your chances of survival and success.
Mistake 1-They don’t listen to the market.
Obtaining the necessary trading skills is very simple, but if you cannot apply them in the right environment, your skills will not generate the profits you want. At the end of the day, the market will eventually dominate price movements, so traders who often ignore the message the market wants to express usually fail.
For example, even if new basic factors appear and buyers have begun to push the currency pair to new highs, if you insist on shorting the EUR/USD, you may need to shrink your hands first and reassess the situation. Take some time to determine whether there is additional information, which is more weighty information that determines the current price trend, rather than stubbornly sticking to your own opinions.
Mistake 2-They do not have a proper risk management plan.
Risk management is not some vague technical term-it just refers to the knowledge and skills of how to manage your foreign exchange trading account. As simple as he seems, it is the key to a long and successful trading career. However, under the stimulation of trading, it is often forgotten and ignored. We would like to take this opportunity to list some basic rules that can effectively manage your account.
Don’t look for a big profit; it is likely to cause a big loss. Successful trading means consistent trading, in which small profits accumulate into long-term high profits. Don’t assume that all your trading will be profitable, plan for loss.
For each transaction, you should only use a small portion of the total account balance. This will minimize your risk, so even if your trading investment ends up losing money, it will not have a significant impact on your account balance. The recommended amount is 2% of each transaction account balance. A more aggressive trader setting is 5%, but it won’t be higher than this. This is a very important rule to maintain, because the lower your account balance, the harder it is to return to the original level.
Mistake 3-They set unrealistic expectations.
Before becoming a continuously profitable trader, it takes a lot of time and experiences a lot of hurting self-esteem losses. There are many things that can be done to speed up the learning curve, but there is no way to completely eliminate it.
Some novice traders mistakenly believe that in order to succeed, they should never suffer losses. Therefore, they put too much pressure on themselves, and every time there is a transaction that goes against them, they are hit hard.
In order to avoid such a situation, you must accept that you will face losses. You will be branded by losses and cut back, although this may make you feel uncomfortable. Whether you like it or not, in some cases you may be in the wrong direction. But you know what? It just happened. Even the most powerful foreign exchange traders will still experience these things. As long as you understand why you are losing money, you actually gain something-experience! Experience cannot be bought by money.
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Mistake 4-They would rather make money.
When we make mistakes, people’s nature just doesn’t like to admit that we made a mistake. This is why it is so difficult for so many people to swallow their losses, admit their mistakes, and move on.
Usually in foreign exchange, traders are biased towards currencies. It’s not that there will be any problems in this way, but in this case it fails, and sometimes they will be paralyzed when their transaction does not go according to plan. They insist on their trading, insist that they are correct, and refuse to take positions that have already lost money.
When it comes to relationships and careers, commitment is a great thing, but when you are trading, you should remember that you should not make emotional investments in a transaction. Successful traders know when they should exit a losing position and can do so quickly. Don’t let your emotions influence your trading.
Mistake 5-lack of education/knowledge
Aspiring traders often enter the market without the right knowledge and education. They do not understand the mechanism of the market, nor do they understand the mechanism of the transaction, which of course may lead to the failure and loss of capital.
Good education and knowledge are undoubtedly important for your trading-but the key to your trading success is correct education and proper training. If you want to survive in foreign exchange trading and hope to succeed and go on for a long time, as a trader, you absolutely need to walk on the right path of knowledge.
We found that the MagKing Forex trading course is a highly acclaimed and trustworthy foreign exchange course, traders can use it to play a huge trading advantage. This course is provided by the celebrity MagKing Forex chief analyst-former senior analyst at Westpac Bank. It is usually free and open to customers and is worth exploring.
Just remember that the success of foreign exchange trading comes down to listening to the market, having a proper risk management plan and following it, setting realistic expectations, opening your heart to accept your losing trades, and having the right education and knowledge to support you.