1. Trying to Predict Forex Prices
Most novice traders think that the way to win is to predict where prices are going but that's simply hoping or guessing and you won't get far with that currency trading - you need to trade confirmation of trend changes only.
2. Believing Markets are Scientific
Forex traders who try to predict also fall victim to the myth that markets are scientific. They follow forex trading systems based around - Elliot Wave, Gann, or Fibonacci and lose. Of course these systems all fail because if there was a scientific theory of market movement, we would all know the price in advance and there would be no market!
Trading FX is a game of odds not certainties.
3. Day Trading
The most common myth of all. More novice traders try to use forex day trading systems than any other method - it doesn't work. As we have said forex is a game of odds not certainties and there is no way you can possibly work out where prices are going within a day.
If you day trade the odds are against you and you will lose your money - period.
4. Trading to Often
Most traders think they should always be in the market in case they miss a move but this is rubbish. You should only trade when your currency trading system tells you there is high odds trade, then and only then should you execute your trading signal.
5. Trying to Buy Low Sell High
This again goes with the trader who wants to predict prices with their forex trading strategy - but it wont work and the best moves with the best odds are breakouts. Most major trends start from new market highs and you need to learn to buy them if you want to make money.
6. Blindly Following a Vendor
There are plenty of vendors selling forex trading signals and forex trading system software where if you follow it they tell you that you can make money - the vast majority are junk and come with simulated track records. Try and find one with a real track record and get ready for a long search.
We can all make money in hindsight but that's not the real world.
7. Trying to Trade the News
If people could trade by following the news there would be a lot more winners than losers! Sure the stories are convincing but that's all they are stories. I love Harry Potter books but I don't think I can fly! News reflects the greed and fear of the herd and if you trade it get ready to dump your money quickly.
8. Making Their Forex Trading System to Complicated.
Many traders assume the more inputs they cram in the better a trading system will work however the total opposite is true - cram too many indicators in and the system will break. Simple systems work best as they are more robust.
9. Failure to Run Profits
There is a lot about said about traders not keeping their losses small, but a far bigger reason for losses is their failure to run profits. Traders get excited when they get a profit and the bigger it gets the more tempted they are to take it. Of course a few dips in their open equity, sees them snatch it - then what happens?
It turns into a mega trend and goes the way they thought and their not in - this happens all the time. You need to have confidence and conviction to accept huge gains.
10. Over leveraging and Stops to Close
Sure you can get 400:1 leverage and trades use it and place stops within normally volatility. I often hear people talk about using a 30 pip stop! Well you may as well flip a coin; market volatility will kill your equity.
You need to de leverage and give a s top that's logical
Finally - Answer this question Before You Trade:
If you understand you mustn't make the above mistakes there is one more question to consider before you trade ask yourself this:
What's your trading edge?
In other words why should you win when the vast majority of traders fail? The edge you have must be logical and you must have confidence in it, to beat the majority of losers. If you don't know what it is you don't have one and its back to your forex education.
Forex can give you a life changing income if you work smart, avoid the mistakes above, get a simple currency trading system and apply it with discipline and you will soon be enjoying currency trading success.
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