More Forex Trader MistakesYes, there are more mistakes that a trader can make. These didn't make it into the Top Five list, but they are still serious.
Below are five common mistakes made by traders. Read them carefully -- and avoid making them yourself. 1. Trading Too Many Currency PairsThis is similar to trading too many lots at the same time. Many traders focus on too many currency pairs at the same time. With nearly 200 currencies available to trade, this can be quite confusing. Most experienced traders will focus on trading only the majors. Still, other experienced trader will focus on a single, high-volume, currency pair like the USD/EUR or USD/JPY. Novice traders should limit their trading to one or two currency pairs. Moreover, one of the currencies should be the USD.2. Failure to Use a Trading SystemA trading system provides structure and parameters to every trade and encourages discipline for traders. However, many traders believe that a trading system is too restrictive and will cause the trader to miss good trading opportunities. It is true some good trades will be missed by using a trading system. However, many profitable and reliable trades can still be found, profits can still be secured, and losses can definitely be minimized with a good trading system. 3. Lack of Trading DisciplineThis is related to having a good trading system. A trading system is only good if the trader is disciplined and follows the rules of the system. However, many traders depart from their trading system in the belief that they “know better” than the system. This usually results in a financial loss. Most experienced traders have the discipline to follow the rules of their trading system. Some people use an automated trading system to prevent undisciplined trading.4. Trading Obscure Currency PairsThere are nearly 200 currencies that can be traded. It might sound exotic to trade little known currency pairs, but it is also risky. Obscure currency pairs are usually plagued with low volume and weak trends. They can also be extremely unpredictable. For these reasons, it is wiser for a novice trader to focus on the major currencies, which are based on strong economies and responsible central banks. They will have large volumes, high liquidity, and well-known trading characteristics. Trading the major currencies increases the potential of a successful trade.5. Lack of Trading GoalsLike a trading system, a trading plan or goal is very important. Ask yourself: why are you trading? Are you trading for extra money or as your primary income? Do you want to trade round-the-clock or for just a few hours each week? Every trader should know the big picture of why he or she is trading Forex. Without long-term trading goals, the trader is unfocused and lost in this huge world of currencies.
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