Trading CFDs carries considerable risk of capital loss. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
November 21, 2017
Forex trading can create significant error margins and for this reason the combination of money management, continuous training and common sense is crucial to get the success you want.
The task of the trader is to maximize the likelihood of success by combining several factors in one trade. The human mind makes a great effort to be rigid and methodical, and this is likely to be one of the main factors that causes mistakes in forex trading.
Let's now see what these common mistakes are.
Trading is not a way to invest and it is wrong to think of it as such. Short term trading is good for speculation but not investment. As a result, the trader mindset has to adapt to the new reality of being a speculator and not a long-term investor.
Reading charts is different, news has different weights depending on the time, so stop loss and tak profit targets must be applied to each operation. Losing a small amount of money is normal and must be tolerated by a trader that is used to invest in other ways.
The activation of strategies only based on technical or fundamental analysis is a mistake because both techniques should be integrated. As in the technical analysis price models have to be confirmed by the behaviour of certain oscillators, the same basic analysis needs to be confirmed by fundamental analysis. You will never find the absolute truth in each of these two sciences taken individually; it’s much better to integrate them, perhaps by deepening the study of other factors, such as the sentiment.
Another classical mistake of the trader is to assume a greater level of risk than what can be tolerated by the invested capital. A too confident attitude will drive the trader to a bad management with too risky operations. This is fatal in a market like the forex one, where the leverage is very high. A wise money-management is crucial because, losing all the capital will simply prevent the trader from pursuing new trading experience, if there is no capital at all on the account.
Common mistakes also include presumption and lack of experience. The advice for those who access forex trading for the first time is always to train a lot before running with real money.
Opening virtual forex accounts (or demos) is the best advice for those who want to approach this type of market. Repeated negative experiences will teach the trader the most common mistakes in his strategy, but he will also know some little regarded but important elements; for example, trading hours are important because the liquidity of a foreign exchange ratio also depends on this and too wide bid and ask cause high costs for the capital.
Another common mistake is to copy the success and strategies of other traders. It’s not because these tips cannot be considered valid, but much for the management of the trade itself. Every stop loss must be adjusted to what each operator is willing to lose, as well as income margins must be conformed in time.
Thinking that the success of other traders can turn into your success is a huge mistake.
May 15, 2018
The volatility of the forex world is one of those factors that attract a huge number of beginner and professional traders.
April 13, 2018
What really drives the forex market? This is a question that is difficult to answer especially due to the complexity of the forex market and all the variables that influence the quotations of a currency.
April 02, 2018
At the beginning of April, we can expect a rise in rates of the Fed, in a very uncertain market moment, especially on the stock market.
March 01, 2018
A list of important events that can move the markets in March...
February 18, 2018
For those trading on forex it is essential to understand all the signals that the market offers daily. Technical analysis tools help the trader understand who is dominating the market: bulls or bears.
February 05, 2018
There are no appointments in the month of February with the two most important central banks in the world, ECB and FED.
January 20, 2018
Good traders always use a stoploss when they open a new trade. You can use a regular stop, but you can also use a trailing stop.
January 02, 2018
Last year closed with important performances that were not seen for a while, especially concerning Euro and Dollar.
December 18, 2017
Among the most relevant macroeconomic data for forex traders, inflation must absolutely be included, or even better all the data on production price trends (PPI) and consumption (CPI).
December 01, 2017
December is crucial for the currency market, but not just because of the important meeting of the Federal Reserve scheduled for the 13th.
November 02, 2017
November starts with the Federal Reserve meeting that should lead to the rise of rates in the month of December.
October 21, 2017
The Forex market allows each trader to operate not only on major currencies like EurUsd, UsdJpy or GbpUsd (the so-called majors), but also on the so-called exotic cross currencies.
October 04, 2017
The month of October is dense with appointments, especially with reference to the news that might come from Central Banks.
June 30, 2017
As always, the month of July represents the antechamber to the month of August, a usually volatile month for financial markets due to the low amount of trades and lower presence of institutional transactions.
May 21, 2016
What are the benefits of trading CFDs over traditional forms of trading?