Being a Forex trader is not an easy thing to do. Being a successful Forex trader is ten times harder. Thus, being a beginner in the Forex trading ‘waters’ can be hard, scary, and unclear even. You don’t know where to start, don’t know what tools to use, which market indicators to consider in the first place, etc. And that is fine, you are only at the beginning of your path, but you will definitely get better over time. You just need to start somewhere, and we can advise you to start with the things that are a huge no-no if you are a beginner in trading.
The very first thing you need to consider doing is creating a free demo account on whichever trading platform you will choose to go with. Usually, all of them have an option for you to trade without actually losing or gaining any money.
However, some experts claim that using a demo account still might have its shortcomings. Those mainly include the user not feeling the burden of actual financial loss. Thus, the beginners will not try their best to come up with the properly forecasted trading plan knowing that they have nothing to lose.
But seriously though, just start with the demo account first and then shift to the proper one. Without doing this, you are risking to lose your money without even starting to trade properly. Now, let’s move to the things you should definitely avoid doing while beginning to trade on the Forex market.
Mistakes to avoid by all means
While that seems to be quite obvious that while trading you shall keep your head clear and your heart cold, even experienced traders often fail to do that. There are two emotions prevailing while trading, just like it is while gambling actually. Those are fear and greed. Fear to lose all of your money and greed of received money. We have all been there, we are feeling broken when losing something and feeling greedy when gaining something and not wanting to eventually lose it, right?
Those are exactly the things you need to avoid happening to you since day one. Yes, you can say that it’s easy to say so but is much harder to do that in practice. You are right, it is hard, but definitely not impossible.
Moreover, the proper trading strategy might help you to avoid those emotions to take over you. Generally saying, trading strategy is thought out set of algorithms that guide you while making decisions about buying or selling the currency. There are other trading tools that might help you to stay within certain limitations and guidelines without letting you to go ‘on the side’.
Keeping only one currency in your portfolio
That is yet another thing to avoid. That is definitely not something an experienced and wise trader would do. As no matter how confident you are about the next move, or about the certain currency, that does not mean that things cannot change. Trust us when we say that they can, and they can change just overnight. Therefore, it is important to diversify your portfolio and make sure you have various currencies. So, if one of those will ‘sink’, it won’t affect your portfolio and overall financial condition. As other currencies may compensate for the loss caused by that weak one.
But just in case to forecast the fluctuations in the currency exchange rate, you need to keep your eye on the latest news in the financial world. That can be done by constantly reading news blogs or magazines oriented on the currency and other financial tools.
Being too stubborn
That is not something that will get you far when it comes to trading. There are some traders out there, who have been trading for a while now, and they are still making that mistake.
They do the following: once they see that their market call is loosing, they start adding up to that losing position thinking that they will benefit them once the market will turn around. But that rarely happens. Usually, here is what happens: the market keeps pushing that position even lower and those traders end up just losing huge capitals. As they decided that they can change the direction the market took and gain profit. Guess what? That is not how it works, unfortunately.
Traders cannot influence the market in a large scope. However, what they can do is to adjust to it and get into that flow.
Going against the market direction
Referring to the previously mentioned point, we hope, you have already understood that you don’t have to go against the whole flow of the marketplace. It is just like standing in front of the moving train. You will be able to neither stop it or turn it around. But you will definitely be smashed if you will stand on its way.
So, you wouldn’t stand on its way, right? Then why to invest in the sinking currency thinking and hoping it will adjust and improve in the nearest future? It is wiser and cost-effective to invest in the promising currency that goes together with the upward market trend.
Not withdrawing money on time
Do you remember about the second worst emotion that might take control over you we have mentioned previously? Greed. That is exactly what keeps traders to take out money as they are waiting for the possible profit to grow even more.
That is the worst mistake you can make. As the currency market can change really fast and you won’t even notice for the coin that was successfully turned into complete disappointment overnight. Thus, you need to analyze the market trends rationally and see if it is worth it to leave the money on the account and wait until the coin will grow even more.
Honestly saying, in most cases it is not, and it might be a better idea for you to take your funds out of the account as soon as you have reached the desired and set profit limit.
Thus, we can advise you not to be greedy and scared of losing money. There might be some place for risk. However, it shall be justified by the possible profit and other benefits.