Everyone makes mistakes at the initial stage of their trading career. Depending on the severity of the mistakes, you lose the money. If you start to trade the market aggressively it won’t take much time to blow up your entire trading account. On the contrary, if you conservatively trade the market, the chances are very high that you will learn the art of trading. Dealing with the Forex market is a very complex task. You must understand technical, fundamental and sentiment analysis to become better at trading. Some of you might think trading is all about big investment but it’s not true. Learn to use the high leverage trading account and you will be able to make consistent profit with a small investment.
There are many mistakes which have the potential to ruin your trading career. Let’s discuss the top three mistakes which cause people to blow up their trading accounts. These are:
- Trading the market with emotions
- High-frequency trade execution
- Taking too much risk
Trading the market with emotions
You must prepare yourself to embrace the losing trades on a regular basis. Never think you will get the ultimate Holy Grail. Even experienced traders are losing money on a regular basis. But they never become emotional after losing a few trades. They consider the loss as their business cost. In order to survive in this profession, you must learn to control your emotions. Psychology plays a vital role when Forex trading becomes your fulltime profession. Unless you are prepared to follow a conservative trading technique, you are bound to lose money on a regular basis. Start to trade the demo market so that you can get a feel for this business. Once you feel confident with your demo trading performance, open a real trading account see how things work.
High-Frequency trade execution
High-frequency trade execution is often known as scalping. Though Forex trading in Singapore is a very popular business, very few traders actually scalp the market. Scalping requires profound knowledge of technical and fundamental analysis. Those who have little knowledge of this market often become emotional and start overtrading the market. Overtrading is one of the major reasons why 95% of the retail traders are losing money. So, if you want to survive in this business, make sure you are not trading the market with emotions. Try to find the very best trades in the higher time frame so that you can make a profit in the long run. Lower time frame trading is always considered as an aggressive trading strategy since you never have complete control over your emotions.
Taking too much risk
Managing the risk factors in the trading profession is the most complex task for the new traders. Those who are relatively new to the Forex market, often risk more than 2% of their account balance. They consider it as the best way to make money online. At times you might secure some big winners but considering the overall long-term outcome, you are bound to lose money. Always try to limit your risk exposure in every possible way. Use the daily or weekly time frame so that you can get the best trades. Instead of scalping, the market tries to become a position trader since it will help you to manage the risk factors more efficiently.
As a retail trader, you should always remember the fact, the outcome of any trade is completely random. Unless you are prepared to lose trades on regular basis, you should never trade the real market. Try to develop a simple trading strategy so that you can find quality trades. Learn more about fundamental analysis since it will allow you to scale the running trades prior to high impact news. Think smart so that you can take proper decision in the Forex market. If required, seek help from the traders in the Forex market.