Numerous excellent traders who have a lot of trading experiences have said that they have suffered losses, even if they know that their trading strategy was flawed, because of their own psychological issues. There’s no denying the significance of psychological elements when it comes to forex trading or any other kind of speculating.
The ability to control your trading mentality will not make you rich, but it will help you avoid losing money and make the correct judgments in your trading. An investor may destroy his or her own success in a zillion distinct ways. Trading has a physical component to it that many people are drawn to.
Don’t put the responsibility on yourself if you lose money trading. Instead, learn from your mistakes and don’t do them again.
Trading Mistakes You’re Likely to Make
- Having doubts about your approach
It is very surprising that a lot of people trade without being confident they can earn money. Doubts are a big problem especially for new forex traders because they end up making wrong decisions about the market. Also, they tend to miss out on crucial times because of uncertainty about their approach.
This issue may be solved by conducting experiments to see whether your approach is effective. If you’re interested in trends, do some back-testing using a large amount of previous data to see if it is consistently resulting in good results.
- No plan or not sticking to the plan
At first glance, this seems like a no-brainer. Instead of simply developing one plan, it’s important to have a few different ones, each with some room for change. If you’re a day trader, make a plan in place for deciding which currency pairings to trade each day. Provide yourself the flexibility to alter your mind every hour if the pair you chose doesn’t take off. Even if it’s a plan, organized flexibility may be part of a plan.
- Taking a loss and walking away too early
The market keeps changing. There are times where you should let it run because the market will be in your favor and make a good run. Always do technical and fundamental analysis to check when this run might be.
- Not setting a stop loss
In addition to the previous mistake mentioned, to avoid letting a losing trade get the most of your trading account, a stop loss that is set based on technical and fundamental analysis should be determined before entering a trade. This is a must for all traders and should be part of a trading plan.
- Making excuses
Making excuses and blaming other events when you lose a trade will not change the outcome. It is best to realize and own up that you made a mistake and should do something about your attitude and strategy. It may be as simple as waking up early, spending more time studying the charts, or making minor tweaks in your trading plan. These sound simple but can have a great effect on your trading goals.
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