Trading Too Short-term- If your profit target is less than 20 points, don't do the trade; the spread you pay to enter the trade makes the odds way against you when you go for these tiny profits. Picking Tops and Bottoms - Looking for bargains works well at the supermarket but not trading foreign exchange; try to trade in the direction the price is going and your results will improve. Being Too Smart - The most successful traders I know are high school graduates. They keep it simple and don't look beyond the obvious; their results are excellent.

The volume is high and the moves are real; there is no better time to trade fundamentally or technically than when news is released; this is when the real money adjusts their positions and as a result the prices changes reflect serious currency flow compared to quiet times when bank traders rule the market with their customer order flow.

Ignore Technical Conditions - Determining whether the market is over-extended long or over-extended short is a key determinant of near-time price action. Spike moves often occur when the market is all one way.

Stop-Loss Orders in Forex Trading

Emotional Trading - When you don't pre-plan your trades, it is essentially a thought and not an idea; thoughts are emotions and a very poor basis for doing trades. Do people generally say intelligent things when they are upset and emotional? I don't think so.

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Lack of Confidence - Confidence only comes from successful trading. If you lose money early in your trading career it's very difficult to gain true confidence; the trick is don't go off half-cocked; learn the business before you trade. Lack of Courage to Take a Loss - There is nothing macho or gutsy about riding a loss, just stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Getting married to a bad position ruins lots of traders.

The thing to remember is the market does crazy things often so don't get married to any one trade; it's just a trade. One good trade will not make you a trading success; rather, it is the monthly and annual performance that defines a good trader. Not Focusing on the Trade at Hand - There is no room for fantasizing in successful trading. Counting up and mentally spending profits you haven't made yet is mental masturbation and does you no good. Same with worrying about a loss that hasn't happened yet.

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Focus on your position and have a reasonable stop loss in place at the time you do the trade. Then be like an astronaut sit back and enjoy the ride, there is no sense worrying because you have no real control; the market will do what it wants to do. Interpreting Forex News Incorrectly - Fact is the press only has a very superficial understanding of the news they are reporting and tend to focus on one element and miss the point.

Learn to read the source documents and understand them for real. Lucky or Good - Your account balance changes don't tell you the whole story about your trading; the fact is if you are taking a lot of risk and making money, you will eventually crash and burn. Look at the individual trade details; focus on your big losses and losing streaks.

Ask yourself this - if I had a couple of consecutive losing streaks or a couple of consecutive big losses, how would my account balance look. Generally, traders making money without big daily losses have the best chance of sustaining positive performance. The others are accidents waiting to happen.

Too Many Charity Trades - When you make money on a well-thought-out trade, don't give back half on a whim; invest your profits from good trades on the next good trade. Here is a simple way of trading multiple time frames in forex. Courage Under Fire - When a policeman breaks down the door to a drug dealer's apartment, he is scared but he does it anyway. When a fireman climbs onto the roof of a burning building, he is scared but does it anyway - and gets the job done. Quality Trading Time- I suggest 3 hours a day of quality, focused trading time; that's about all your brain allows.

Don't even think that time spent in front of the computer watching the rates has any correlation with profitability; it doesn't. Rationalizing Killer - Absolute Killer.

Trading Strategy - Cut Losses Short, Let Profits Run On

Put your trade on and let it run. If it hits your reasonable pre-determined stop, you're out. Moving your stop is like getting up after being crushed with a knockout blow; it's pointless, things will only get worse. Don't ignore the obvious - you are wrong, so get out. Come back the next day and try again. A small loss will not hurt you, but a catastrophic loss will.

That's a mistake. Avoiding the Hard Trades Bank - FX traders have an axiom: the harder the trade is to do, the better the trade. When it's easy to get them, then sit back and wait for better levels. So if you're trying to get into a trade or more importantly get out of a trade, don't putz around for a few points; get your business done. Too Much Detail - If you are trading more than 2 indicators, then you need to clean house. Having many indicators stifles trading and finds reasons not to trade.

A setup and a trigger is all you need. Here are some of the trading conditions you want to avoid in the forex market. Giving Up Too Easy - Your first trade of the day may not be your best but certainly, it's no reason to quit. I have a preset daily trading limit and I use it; you can't make money by making excuses.

START TRADING IN 10 MINUTES

Getting trades wrong is natural and should be expected. Jumping the Gun - Don't be penny-wise and dollar foolish; wait for your trade signal to be clear. Put on your trade and give it a decent size stop loss so that you don't get knocked out by random noise. Do trades and don't buy lottery tickets extremely tight stops. Afraid to Take a Loss - Trading is not personal; it's business. Don't think that a poor trade is a reflection of you. It could be you are just ahead of your time or a commercial order hits the market and temporarily creates a small unexpected move. If its going bad, it will probably get worse; I think that's Einstein in motion stays in motion.

If you are bored, don't trade - the reason you are bored is there is no trade to do in the first place. Whenever you trade, determine where in the motion you are entering. This is the money sucker of the century. When the shorter-term moving average crosses the longer-term moving average it only means that the average price in the short run is equal to the average price in the longer run.

For the life of me, I cannot understand why this is bullish or bearish. Easy to set up on software, complete with lights, bells, and whistles, it's good for the seller who's getting thousands for the software, but in terms of creating profit, it's a zero. Stochastic- Another money sucker. Personally, I think this indicator is used backward; when it first signals an overdone condition, that's when I think the big spike in the overdone currency pair occurs.

To be overbought means strong and oversold means weak. Try buying on the first sign of overbought and selling on the first sign of oversold; you'll be with the trend and likely have identified a move with plenty of juice left. Same on sell-side; sell at A lot of forex brokers are horrible; get a good one.

Read forums and chats in several different places to get an unbiased opinion. Simulated Results Watch out for black-box systems; these are trading systems that don't divulge how the trade signals are generated. A great majority of them are absolute garbage. Every trade placed involves a proportion of risk. To protect against this volatility, many traders implement a stop-loss order on their trades.

Every trader loses money in Forex

This stop-loss order protects them against being wiped out by large losses. Setting this stop-loss protection is even more important when trading using leverage , as leverage can increase profits but also amplify losses. The smaller your margin requirement and the more leverage you are intending to use, the greater the risk to your capital. Stop losses should be set carefully, as the price at which you exit your trade is a vital part of the forex trading strategy. Your stop loss will protect you against significant loss, but it may also hamper profit if it is set at the wrong point.

Forex trading is sometimes a game of chance as much as skill, but practice will improve your reading of the market. The more experience you acquire in forex trading, the easier it will be to choose where to set your stop losses across sessions. Setting a stop-loss order also protects against the emotions that may cloud your decisions when trading in forex, as you have already set a considered and immovable safety net for your trade.

There are many types of stop orders that can be used in forex trading to protect traders against potential losses. Stop-loss market orders and stop-loss limit orders are discussed below. When arranging a stop-loss market order , you first set your stop-loss price.

When the market nears your set limit, a market order is automatically issued by your broker to close your position at the current price — whatever this may be. With a standard market order, a trader outlines that they wish to trade a certain number of shares of a stock at the current market-clearing price. Basic market orders do not allow traders to set an exit price. Using a stop-loss market order instead allows the investor to specify their limit price. In most cases, the stop-loss market order will reach or end up very close to the stop loss price set by the trader.

In extremely volatile market conditions, however, you may find that the exit point is different from the stop-loss price that was set by the order. This scenario is referred to as slippage.

If your trading activities are affected by slippage, you may find that you end up selling securities at a lower price than you had hoped. Slippage is one of the downsides of trading using a stop-loss market order. Consequently, some forex traders prefer to exit trades manually, so that they can retain control over assessing the market conditions for each trade, and exit when they deem conditions to be favourable.

If a stop-loss market order has been set, it will automatically exit the trade regardless of conditions. A stop-loss order, described above, triggers when a security falls to a certain price — it is a market order that executes at the next price available.