The Forex Trading Market has forever stayed the most reachable trading place in the world. Just with the help of a computer, an internet connection, and few hundred dollars, you could begin day trading in forex. But most important thing that needs to remain in mind is that “forex trading is easy to start but with its unpredictability, it does not assure anyone of assured returns or gains”. As a prudent trader, you need to exercise caution about five common mistakes that you need to seriously avoid while trading.
Let’s have an idea about five such mistakes;
Do not do day trading when there is a STOP LOSS
As you are aware that a stop loss is a counterbalancing order to take you out of a trade when the price goes against you by a certain amount. Therefore, it is assurance that keeps you out of losing a trade. When the price is not going in the right direction of your expectation, it is no use to continue with the loss in the trade. There you need to accept the loss and continue with next trade.
Absence of risk management for every trade and every day
Trade size or position size is most important for your day trading. When your trade size is extremely big or small, you fail to make sure about the type of risk that you need to take. This results in absence of risk management measures in trading. In the first part of your risk management strategy, you need to make sure about the exact amount that you are ready to risk on every trade. The second type of risk management is you need to take measures for controlling daily losses. When you fail to do this, it results in the loss of major part of your capital.
Know your broker completely
When you trust your broker blindly and deposit your funds with him for trading, you make another serious mistake. The broker might be indulging in scams with inadequate experience in forex trading. Poor trader management by the broker could give you serious loss in business. You need to remain cautious, while you select the broker. Go through all the related literature in web before you decide to invest your money with a particular broker.
Never do day trading without a plan
As a wise trader, you need to do day trading with a proper trading plan. A trading plan meticulously lists out precisely what you need to follow out in a particular day trading. The plan would also include the UK Forex Markets that you are going to trade and the exact timings for the trading.
Do not make use of fundamental data
When your goal is to implement your trading strategy, it is immaterial to make use of fundamental data. Fundamental or economic data has absolutely nothing to do with short-term price movements and for this, you need to avoid looking at the fundamental analysis, while you continue with day trading. This data would not serve your purpose as its figures are biased. As a matter of fact, you’re trading plan and strategies could give you the real advantage without allowing you to indulge in gambling in the trade.