Currency trading education is all about getting the right information but most traders believe myths or base their trading strategies on logic which is not correct and lose. Here we look at some common mistakes, you must avoid to enjoy currency trading success...
One of more of these mistakes are made by the majority of novice traders so lets take a look at them, there in no particular order of importance to avoid - there all important!
1. Forex Robots and Expert Advisors make Money
You have seen them advertised, promising to double your money each month with no effort and all you do is pay a hundred dollars or so for an income for life.
They don't work and if you use one these systems you will lose very quickly. If making money was as easy as the robot vendors claim, no one would work and everyone would trade for a living.
2. Day trading and scalping Work
All short term volatility is random and there is no way you can get the odds on your side and win because of this. Trading short term moves is a loser's game - it looks low risk but you are guaranteed to be wiped out.
3. Markets can be Predicted
Prediction is hoping or guessing and you won't get far doing that in any venture in life and that includes Forex. The far out investment crowd love the theories of Elliot and Fibonacci which claim they can predict the future - but if they can do this, why do they ever get a trade wrong? Never predict, trade the reality of price change and you will have the odds on your side.
4. You can Trade breaking News Stories
News is discounted by the market instantly.
The news itself is not important it's the investor's view of the news which is and everyone may see the same facts but they all draw different conclusions from them. Markets always fall when the market is most bullish and rally when it's most bearish so never trade news stories.
5. Working Hard or Being Clever Guarantees Success
Forex trading suits a simple approach as it's an odds based market. Over complicate your trading and your Forex trading strategy will have to many elements to break. Don't work hard, work smart - effort may make you more money in a normal job but not in Forex.
6. Leverage is the Key to Big Gains
Yes it is but more novice traders wipe themselves out due to over leverage than any other reason. You can get 200:1 leverage with any broker now but novices should start with NO leverage at all, until they are comfortable with there trading and use no more than 10:1 after that.