Forex Trading Mistakes

Author: Kelly Price

Here are your 10 forex mistakes, in no particular order of importance:

1.  Day trading or scalping 

All short term volatility is random and all forex day trading and scalping systems lose money longer term. You can't win at it so don't try. If you want to know why so many people claim to make money day trading, check out point 5. 

2. Trade news stories or expert opinion 

News stories are just that - stories and opinions and should not be traded. 

All forex news is instantly discounted in the price and therefore cannot be traded Furthermore, the news always reflects the opinions of the crowd and the majority always lose. 

3. Try to predict forex prices 

If you try to predict forex prices in advance and what they might do, you are simply hoping or guessing and you will see your forex predictions become as accurate as your horoscope. 

Trade the reality of price change only and confirm every move. 

4. Using scientific methods 

You will see vendors selling forex trading strategies based around such methods as Gann, Elliot Wave and Fibonacci and they all don't work - think about:

If forex prices were predicable with scientific accuracy, we would all know the price in advance and there would be no market.

Leave the above to the dreamers and the far out investment crowd and concentrate on trading the odds. 

5. Following a mechanical System From a Vendor 

This is true in 99% of the cases. 

The huge majority of forex trading systems sold on the net come with the disclaimer "simulated in hindsight" in plain English this means the vendor made the track record up. Avoid these trading systems

6. Using to Many Indicators 

20 indicators are better than 2 right? Dead wrong!

If you use too many indicators in your forex trading strategy you will lose, as your system will have more elements to break. 

Simple systems work best and always will so keep it simple! 

7. Using indicators incorrectly 

How many times have I seen traders buy dips to moving averages and execute a trading signal? I have lost count - hundreds of times but moving averages are a lagging, not a leading indicator and should not be used in this way. 

The above is the most common example but there are many more. 

8. Working to hard 

In many occupations the more effort you put in the more you get out - not so in forex trading, you get paid for being right with your market timing and that's it. 

Don't make the mistake of working to hard and thinking you will win - you won't. 

Work smart and get the right forex education and forget about working hard. 

9. Over leveraging

Forex brokers will give you leverage of up to 400:1 - this is way too much to be using. De leverage, so you can take more risk per trade and this leads me on to the final point:

10. Placing stops to close and trailing to fast 

Most forex traders because they over leverage, have to put their stops to close and then get taken out by the market noise. They try so hard to avoid risk, they actually create it and guarantee they will be stopped out. Most traders also trail their stops to quickly and never manage to run a profit. 

The 10 mistakes above are made by most losing traders if you avoid them and get a sensible, simple, trend following method which  trades the odds, you can enjoy currency trading success and make big profits.

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