A few months ago I had the chance to work with a Fx trader who was very well funded but he was struggling to get the profits he wanted. He contacted me after reading a few of my best online trading articles. After several meetings we were able to find an appropriate trading strategy and money management plan to fit his trading goals.
However, he had lost $30,000 from his hard earned money and he was been a victim of the psychological manipulation of the market.
During my meetings with him I was capable of detect the main mistakes he was committing and that were preventing him to profit from the market. In this article I will be sharing with you the mistakes I saw he was committing that cost him $30,000 in trading losses.
Not using the right money management and risk management techniques:
One of the biggest issues this trader had was that he was utilizing the wrong money management techniques. People want you to believe that making the most pips is what really counts, however I think differently. A pip is a unit of measure that is used in Forex currency trading and the number of pips you produce in a trade is merely determined by price fluctuations. On the other hand, when you use percentages as goals instead of pips you will be able to manage and measure the performance of your trading account.
Allowing your emotions to cloud your judgment:
Letting your emotions get on the way is the best way to lose all of your trading funds. Whenever a trader is manipulated by his emotions he is very likely to make irrational trading decisions, and irrational decisions lead to losses.The best way to control your emotions and become a disciplined trader is by following a strict money management plan and goal oriented trading strategy. Building yours should be one of your first priorities as a FX trader.
Over trading ends in failure:
This is one of the most detrimental and expensive trading mistakes. Overtrading is defined as the action of searching for trading opportunities when they are not there. Sad but true, over 80% of all traders I have had the opportunity to do business with were overtrading. In the past I have compared over trading with an addiction like alcoholism. An individual who has a drinking problem never admits that he has an addiction nor does a Trader who is over trading. The only way for somebody who over trades to become profitable is to admit their mistake (overtrading mistake) and look for a way to fix it.
Trying to find instant gratification by trading low time frames:
I don’t have anything against scalpers or those that like to trade low time frames, I know low time frame traders who make a killing in the Forex. The issue is that scalping is not for everybody. Many people become scalpers for the wrong reasons and plenty of times they just want to make money quickly. Unfortunately, this is not how successful Forex traders roll and I have learned that looking for instant gratification is likely to lead to big disappointments.
In the end, make sure you concentrate on putting all together and don’t rush to open a live account if you are not ready.
I'll be posting more best online trading tips and ideas on my upcoming articles.
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