The beginning of your trading career is always going to be very challenging. If you think you can easily make money without learning the details of the market, you are making a big mistake. Think about the doctors and engineers in our society. All of them have worked really hard to build their trading career. Just like any other profession, a currency trader should work hard to learn the three major part of this market. Once you learn the three major forms of market analysis, you need to use the demo account to create a balanced trading strategy. But even after doing all these complex things, more than 95% of retail traders are losing money. So, let’s learn the most common mistakes made in the trading business.
Trading the market with aggression
There are two types of traders. Most of the novice traders are known as aggressive traders because they start to trade the market with huge risk to recover their losses. Even after winning a few trades, they increase the lot size to maximize the profit factors. Unlike them, the pro-UK traders prefer to trade the market with a conservative trading strategy since it allows them to stay on the safe side. Making consistent profit in the Forex market is a very challenging task. You must learn to trade the market in a conservative way or else it won’t take much time to blow up the trading account.
Trading with a high leverage trading account
Leverage is a double edge sword. You must learn to control the leverage or else it won’t take much time to blow the trading account. Being a new trader, open an online trading account with very low leverage so that you are forced to trade with low risk. In fact, professional brokers like Saxo never offer extreme leverage to the retail traders. On the contrary, a lower class broker will always offer a high leverage trading account. So, never trade the market with a high leverage trading account.
Stop trading the market with high risk
Trading is all about managing your risk exposure. You might be a skilled trader, but if you fail to control the risk exposure, it won’t take much time to blow up the trading account. No matter how well you understand the market, you should never risk more than 1% of your account balance. However, you can take 2-3% risk in each trade once you know about the nature of this market. Over a period of time, you will gain experience and this will allow you to take bigger risks. But make sure you never risk more than 3% of your account balance in any trade even if you have the best trading strategy in the world.
Stop trading the major news
News trading is one of the major reasons why the rookie traders are losing money. They execute trades prior to the release of the news data hoping to make a huge profit. At times such a strategy might work but this is nothing but gambling. You need to wait for the news release and analyze the fundamental factors. Once you have done the proper fundamental analysis, you need to assess the technical data and market sentiment. Being a new trader, analyzing these three variables is a very hard task. So, it’s better not to trade the news at the initial stage.
Trading the market against the trend
You need to create a simple trend trading strategy or else you will blow up the trading account. You might have huge money in your trading account, still, try to execute your trade in favor of the market trend. Stop following the footstep of the rookie traders and focus on long term goals. Keep on learning new things about trend trading strategy so that you can easily make a profit at any market condition.