Everyone knows trading is one of the most profitable business in the world. Though the market offers a high level of profit potential to the retail traders it doesn’t mean everyone is making money. In reality, 95% of the traders are losing money due to lack of trading knowledge. As a new investor, it’s very obvious you will become very excited after winning a few trades and this excitement will force you to overtrade the market. At times you will use max leverage to secure big profit from this market. But by following such strategy you will never become a successful trader. There are few simple techniques which you need to follow to become a profitable trader within a very short period of time.
Reading the analyst data
This is one of the most important things every new trader should know. If you do some research you will find much analysis on the major pairs. The new traders blindly follow this analysis and end up losing a huge amount of money. The analysis is nothing but a general idea where the market might go in near future. This is not a perfect signal. No professional traders can give you the guarantee of winning a single trade in this market. You have considered trading profession very carefully. This market is completely random and the outcome of each trade is totally unknown. So if you follow the analyst data blindly you won’t be able to make a decent profit from this market.
Buying the deep and selling the high
Buying the deep and selling the high is a very common problem of the new traders. Once the price of a certain asset exhibits significant bearish momentum the new traders start executing long trades. They don’t understand the fact, they are actually trading against the current market trend. Similarly, when the price of certain assets creates a new high they think this is the perfect time to sell this pair. Initially, they might see some profit but this is nothing but the minor retracement of the price. As a retail trader in the Forex trading industry, you should always trade the market with the long-term trend. Wait for the market retracement to execute quality trades in favor of the market trend. But never trade against the market trend as it will dramatically increase the risk factors.
Not closing the losing trades
How many of you have blown your accounts? To be honest 95% of the traders have the unique experience of blowing their account. But do you really think they have blown their account by executing many trades? The simple answer is NO. Most of the traders have wiped their trading account with one single losing trades. Being a new investor you need to have the courage to close the losing trades at the right time. Nothing is absolute in the Forex market. You will always have to participate in considering the random outcome of this market. Even the long-term trend can get changed within a fraction of a second and there is nothing you can do to avoid this.
Overtrading the market
Overtrading is a serious offense in the investment business. You don’t have to stay in the market all day long to make a profit. The frequency of your trade execution has nothing to do with profit factors. If you can find a single quality trade it’s enough to secure your whole month profit. In fact, the professional traders are following this simple principle and leading their dream life without any hassle. But controlling your emotions at the early stage will be extremely hard but if you focus on the risk management factors you will never be able to overtrade the market. Try to write down the details of each trade execution since it will dramatically filter out the low-quality trades.