Five Trader’s Practical Mistakes
Being a trader besides requires trading skills but also an experience. The lucky trader certainly has an interesting experience and does not need to drag on in losses. Of course from the experiences of professional traders can be taken some important points from them. Which will be a learning for beginner traders. Here are five practical mistakes that are abstracted from many trader mistakes often done.
Feel Smart with Complex Trading Strategies
Traders often start with a simple strategy, and get a small profit. Then they assume that if they continue to tamper with or update their system, taking into account several more variables, they will increase their profits.
While traders should look at simple things like price movements (which are the ultimate determinants in achieving profit) and identification of market trends, trending or ranging, finding or determining the exact reversal point and trying to trade again.
The cycle is usually a simple strategy to a complex strategy and then regain consciousness using a simple strategy.
Waiting for News Release or Economic Data
The movement of the forex market after the release of important economic data can make traders think easy to get quick money from the fluctuations that occur. Especially during the release of NFP data and FOMC meeting results.
In fact, trading when news releases can be very difficult. Price fluctuations that occur in the first few seconds after the data is released, liquidity decreases dramatically so that it can widen the spread. That is, traders are difficult to enter the market (entry) to get a favorable price, or even difficult to exit the market (exit). Though maybe they are in a state of loss.
Trading with news releases or economic data is still possible to do. That is before the data is released. However, market entry execution requires market analysis and data statistics to determine the effects that may occur in the market after the release. This analysis should be done immediately because other traders around the world are also doing the same analysis. Not only the effects of a few minutes or hours ahead but up to several days or weeks ahead (depending on the data released).
Money Management Means Putting Stop
Money Management is always an important factor in determining the success of this business. Of course after a trader has found and developed the skills of his ability to earn profits consistently.
Most importantly, money management not only places a stop order during trading, but covers how much total funds in the account will be risked on each transaction. Usually less than 1%. Also see how many transactions can open at a time, and if there are multiple positions open, do they need to hedge each other. By focusing on money management, traders will become professionals and ignore money management means failure, even with the best strategy.
Trading with Many Pairs
Trading with margin is profitable. A trader can trade every day up to more than 10 times the transaction. Of the 10 transactions it will probably contain multiple pair transactions, which correlate directly or indirectly. But this works for traders who have experienced and have a lot of capital.
For beginner traders, trading a little and focusing on little or only one pair that traders understand will be beneficial to the trader itself. Except traders who are already professional.
The majority of traders will benefit from their patience, focus on something they know and wait for the best opportunity.
Guessing the Market Direction
Trying to guess the direction of the price could be the beginning of failure for the trader. That’s what some beginners try to do. Guessing the direction of price can blind us, as it can cause a psychological bias against position and may disrupt our rational judgment.
The trader must be agile, use and fit the system and replace the losing trades with the profit. Dynamic moving market that should underlie trading done. When it comes to the conclusion of the analysis or according to the trading plan, you should wait for the confirmation of the emerging market.
Yes, Five Practical Mistakes Traders are commonly done by beginner traders. There is even a protracted until it is time to realize what is suitable for the trader itself to do when trading.