Here are ten common errors in forex trading tat cause equity wipe out. 95% of traders lose and they make some or all of these errors. If you do then you will wipe yourself out so learn them and avoid them.
1. Trying to Predict
Most traders try and predict where prices will go but this is simply relying on hope and you will see your equity disappear quickly!
You need to trade on the reality and that means waiting for price momentum to confirm the trend is going your way.
If you dont know how to use price momentum indicators learn or lose.
2. Following a Scientific Theory
Follows on from the above markets are not scientific so avoid theories such as Elliot Wave or Fibonacci numbers.
Its pretty obvious markets are not scientific, because if they were we would all know the price in advance and there would be no market PERIOD.
When you learn forex trading the most important part of your forex education is seeing forex trading as an odds game.
If you trade the odds you will make a lot of money.
3. Trading To Much
Most traders like to trade all the time in case they miss a move and end up trading signals that have poor odds.
Keep this fact in mind you get your reward for being RIGHT not for effort or how often you trade so trade only high odds trades and they dont dome around often
4. Buying From a Vendor
There are numerous sharks out there who say they will make you rich for a few hundred dollars!
Really?
If the forex trading systems were as good as they claim they would be to busy making money to bother you.
Avoid them and dont fall for the hype, they never have a track record to back up their claims
5. Poor Money Management
If you dont know how to place stops then you will lose also over leveraging will kill you. Play great defence first and the profits will take care of themselves
6. Not having The courage to Hold Profits
Most traders get so excited they have a profit they take it early! If you do this you will lose have the courage of your conviction to run trends for weeks or months if there going your way.
7. Chasing your Tail
Be patient with any forex trading strategy or system.
At some point you can expect to lose for weeks or months (thats not the systems fault its the markets) judge your gains over years not months.
8. Trading The News
Trading news stories is dumb you have huge volatility and as the news is discounted in a split second, its a lottery and you wont win - you will simply get murdered by volatility.
9. Mixing Fundamentals and Technical's
There two separate disciplines you cant mix them choose one and stick with it. In our view the best way to trade is with forex technical analysis.
10. Day Trading
You can make money day trading!
Why are some trades so stupid?
Its 100% guaranteed way to wipe out your equity as the data is to short and you cant use it to get the odds in your favour. If you cant get the odds in your favour, you will lose PERIOD.
This lead on from our point about vendors selling junk systems that have no chance of making money and day trading ones are the most popular try and find a real time track record and you will look for a long time!
Finally!
There you have it 10 errors to avoid and if you do you will have a great chance of making big gains - fall for any of them and you will lose your equity and join the 95% of losers.
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