Seven Deadly Trading Mistakes in Forex Trading

Fatal mistake 1: Failing to stop losses quickly

Successful trading, like a successful life, is determined by how well we manage our losses, not how well we avoid them. If you really want to be a savvy trader, learn how to lose professionally by minimizing your losses. This is the key.

How to get rid of mistakes without a quick stop loss

1. Never start a trade before deciding where to protect your ship when things go wrong. Like, never start a trade without setting a stop loss.

2. Always stick to your pre-set stop loss. Needless to say, but only a few aspiring traders are disciplined enough to do this. Why is this so hard to do? Because getting out at a stop loss is a clear admission that you are wrong. This act does not bring a warm feeling of pride, nor does it build one's confidence. But true trading masters have learned to overcome these difficulties. They have become experts at stopping losses at dizzying speeds. They do this because they have developed an intolerable feeling for positions that don't work for them, and will kill them as soon as trouble sets in.

3. If you have trouble sticking to your stop loss, get into the habit of selling half of your position first. This approach satisfies two opposing impulses, the urge to get rid of the falling position and the urge to give the falling position a chance to rise again. By dividing the problem in half, traders usually gain a greater degree of clarity and mental focus. Psychologically, traders feel that their situation is less difficult and therefore feel better. The question of what to do with the remaining half still exists, but because half of the problem no longer exists, it becomes easier to come up with a workable solution.

Fatal Mistake 2: Counting Money

Constant monitoring of how a trade goes up and down is a devastating activity that can rob a trader of profits for years. This process, often called "counting money," not only deepens fear, but also heightens the uncertainty of every moment, preventing one from focusing on the right technique. The right technique ultimately determines how much we can profit.

Focusing too much on the idea of "where are you" rather than doing what you should do can lead to ill-advised, ill-founded knee-jerk reactions and too quick reactions. Instead, traders must be confident that their technique is correct every step of the way, and that profits will come naturally if the technique is followed correctly.

"Counting money" is often the fault of traders who are not used to making regular profits. Not only does it rob traders of considerable gains, but it also fuels long-term uncertainty, fear of loss, and an imbalance of emotions that can lead to destructive behavior.

How to Overcome the Problem of "Counting Money"

1. For each trade, set two protective sell prices to sell your entire position. Every trade you make should have one entry point and two exit points, namely stop loss and target. Stop loss is for protection, and the goal is to profit.

2. Sell only when your position reaches a stop loss or target, whichever comes first. By adhering to this principle, traders place the fate of every trade on their trading strategy, rather than on their own greed or fear.

3. When the desire to sell before any sell-out point becomes overwhelming, sell only half and keep the remaining half until the sell-out point that the strategy allows. This way, you satisfy your desire to sell while preserving the integrity of your trading strategy.

Fatal Error 3: Converting Time Frames

There is no precise point at which one cycle begins and another ends. Instead, it coincides at a meeting point. This narrowing is intended to point out a very common mistake that many market participants make: buy in one time frame and sell in another. The issue of "switching" time frames is simply a reason to ignore stop losses, our only protection against disaster.

By switching from one time frame to another, traders postpone the ultimate feeling of being a loser. Cover their failure with a flimsy plan, and paralyze themselves into a deadly state of denial by cultivating false hopes. Traders who make such mistakes are in fact unfit to trade, and the market will not tolerate them pretending for too long. Ultimately, the mistake of switching time frames will erode traders' resolve, deprive them of their ability to think and act freely, and relegate them forever to tragic victims.

How to Eliminate Errors in Converting Time Frames

This fatal mistake of switching time frames cannot be allowed to exist and must be completely eliminated, because every time such a mistake is made, it will lower the level of the trader, and once the habit is formed, it is difficult to break.

1. If you buy within a time frame, be sure to set up your sell-out points within the same time frame

2. When you are long (empty), you should not adjust your stop loss (exit point 1) downward (up). This is a major signal that you are about to make the mistake of converting timeframes. Used correctly, adjusting your stop loss upward to protect your gains can. But adjusting your stop loss downward makes no sense and will make you more reluctant to do what you were meant to do. Once you take this action, you will do it again and again until the stop loses its ability to protect you from disaster. Both methods will easily prevent you from making the fatal mistake of converting timeframes.

Fatal Error 4:GMI ForexNeed to know more

It's natural for us to need certainty before we act. But the truth of the matter is that the opportunity to get rich is always given to those who don't need to know more to act wisely. Markets come first, and big profits always come before the facts come. Those who want to know more before they place their bets will always be one step behind, and will always be on the wrong side of the market. Those who are not bound by the need to know more can move freely. When they truly understand the wisdom of uncertainty, they become chart makers, not chart readers. So the point is, you as a trader can't afford to want to know more, because by the time you know all the facts, the opportunity has run out.

"Need to know more" is a fatal mistake, one that keeps you from acting when you should, and encourages you to act precisely when you shouldn't. We play with odds, not fortune telling, and traders who don't trade until all the facts are clear will never succeed.

How to Eliminate the "Need to Know Too Much" Mistake

1. Don't buy on the heels of good news

2. Use charts to form your buying and selling decisions

3. If you find yourself hesitating because you want to know more, stop and ask yourself: "Is what I'm looking for necessary for trading, or am I just looking for more comfort?" This question will end the hectic behavior.

Fatal Mistake 5: Being too self-righteous

When the market is very good for you and everything is in your favor, you cannot escape the hand of negligent destruction. When a string of profits bulges your wallet, you must do everything in your power to protect your hard-earned gains and maintain a clear mind that can help you generate them. Unfortunately, every trader will eventually realize that continuous profits usually reduce one's alertness, because then complacency has taken advantage of it.

Many newbies don't understand this because they don't realize that some of the characteristics of the market environment they are familiar with are about to change after a considerable period of profit. In fact, in many cases, the market environment and the opportunities it presents have changed. It is no longer the market that the trader started trading on the first day. It has different characteristics and a different set of opportunities. However, it is precisely when the market is about to change that the trader who has not received an acceptance report becomes complacent, raises his chips and gambles. Without realizing that the environment that brought him a string of victories no longer exists

How to get rid of the "too self-righteous" mistake

Learn to take a step back after every successive gain

Reduce your trading chips by half

2. Reduce the frequency of transactions

Fatal Mistake 6: Profiting the Wrong Way

We all know that money can be obtained with integrity and honesty, and on the other hand, we also know that it can be obtained in dishonest, shameful ways. The end result may be the same, but the means of obtaining money may be very different. It's like asking a heart surgeon and a drug dealer, both earning a lot of money, if they can be equally respected. Of course not. The same is true in the trading world. Many newcomers to trading don't realize that it's possible to profit in the market the wrong way. Think of those who didn't stick to protective stops on a position, and who might end up making money on the trade by doing so, unaware that they committed a crime against themselves and that punishment would follow. These people got the wrong taste of success, and sooner or later the market will recover these undeserved profits. What do you think they will do next time they are in a trade that has triggered a protective stop loss? Of course, ignore the stop loss again.

Making money the wrong way reinforces bad habits and irresponsible behavior. Once traders get a taste of success from the wrong way, they almost always repeat the mistake until the wrong way moves them and gets back the money they made the wrong way or even more.

Master traders are not interested in having good luck in the market. They do not pursue, hope for, or enjoy the gains that come to them despite their mistakes and missteps. Traders who are truly profitable ideally have no gifts in the market.

The right actions and the right approach will not always generate profits for honest traders, but one thing is for sure, repeated wrong actions can eventually lead to the demise of a lazy trader. Make sure you profit the right way.

How to Eliminate the Wrong Way to Profit

1. After every profitable trade, review every aspect of the trade: buying, initial stop-loss setting, waiting, money management, selling, etc., to identify mistakes and rule violations. A key issue with & S226 & S226 & S226 is the feeling of winners that accompanies these not-really-profitable trades. Whenever traders allow themselves to feel like winners on a trade when in fact it's not really winning, they send a message that what they're doing is right, okay. This will reinforce the wrong behavior and encourage one to repeat them. Needless to say, mistakes will eventually catch the trader.

2. Realize that the two evil habits of hope and holding. are the two criminals who lead to profit in the wrong way.

Fatal Mistake 7: Rationalizing It

Let's see if you can hit where the trader got it wrong in the following scenario. An excited trader found a good trading opportunity in a day trading chart. Everything looked right, and all the market indicators came alive on a particularly positive day after an afternoon of consolidation. Then, the entry point was reached. The trader executed the operation and closed. After a brief close, he suddenly started to turn down, spit out short-term profits, and is now consolidating at the entry point. "What happened?" the trader thought. "This is very funny!" The afternoon rally has now completely evaporated, and the market is clearly weak and retaliatory. Now his stop loss is only one point. The trader started researching for clues as to why the Perfect Entry symbol started to fall. After checking all the news (there was no news), the trader checked the daily chart. "Yes, the daily chart looks good. It's really good." He commented, "I'm going to move the stop loss down to the lowest point of the day. Yes, it's impossible to fall below that." Ten minutes later, as the Perfect Entry symbol took his money down to the South Pole, the new stop was pierced. Confused, the trader closed his position and couldn't believe how much he had lost. What did this trader do wrong? Did the trader ignore the weakness of the developing market? Not exactly. The trader made three fatal mistakes:

1. Convert the timeframe. Select and buy on a full intraday basis, from an intraday entry point and a tight intraday stop, to a daily chart and a daily adjusted stop completely changes the initial trade, causing the initial risk/reward ratio to tilt in a direction that is not favorable to the trader.

2. Planned the trade, but did not execute the trading plan. Sticking to the original plan, regardless of the time frame, is absolutely essential. Failure to execute the trading plan exposes you to the market's blessing and erodes the confidence necessary to trade effectively.

3. Rationalize. Rationalize changes in timeframes and plans on the basis of two other false mentalities is a form of denial, denial of what is happening. Honesty True honesty no matter how ugly the truth will put you above most market participants who cannot summon strength from within and instead prefer to stay comfortable blaming their losses on something or someone other than them.

Planning your every trade is essential if you wish to approach the market with wisdom. Most traders who fail drive by feeling, without even a shred of knowledge about how to plan their trades. However, planning your trades but not following through on them is an even greater sin. Those who know how to do it, but fail to do so, are the least deserving of this knowledge, and the market will often take care to give them the reward they deserve: losses. Rationalization is the culprit behind this and many other fatal mistakes. Because most people are overly optimistic by nature, they have a hard time ending events that have caused them losses and pain. When the time for action comes, it can be said that many people cannot muster enough determination and courage to jump. Instead, they start a process of rationalization. This process of convincing themselves not to do the right thing will eventually lead traders to leave the game entirely.

How to get rid of the mistakes that rationalize it

1. First traders must know that they are rationalizing. The key signals that you are trying to persuade yourself not to take action are as follows:

Ask "why" a symbol behaves the way it does. The reasoning behind a symbol's behavior has no meaning for a trader's planned actions. The correct action for a trader is to sell first and then ask why.

Checking the news. Knowing the news itself is not a bad thing. However, when the real purpose of verifying the news is to delay a planned action, it is nothing more than an act of escapism.

Think in terms of "possible". Whenever a trader starts using "possible" when a stop loss or price target requires action, uncertainty prevails. It is almost always better to stick to a pre-made trading plan than to choose a change in the middle. This adherence to what was previously planned to do may not always produce the best results, but it will develop self-discipline, which is the most valuable trait a trader can have. Once a trader sees the signal of rationalization, the only correct action is as follows:

Sell a position. This may sound harsh, but my years of experience have convinced me that rationalization more often leads to harm than benefit. If you find it difficult to sell your entire position, sell at least half of it to lighten the load. In short, if you try to find a reason to keep a position, there is obviously no obvious reason. Looking for a reason means no reason. A trader who stays in a position without a solid reason will be a losing trader.