Everyone enters the Forex industry intending to make massive amounts of money. However, it is not as easy as you think. You need to understand how the market behaves, learn how to predict future market conditions based on current data, and invest your money wisely.
Forex Academy, Forex research and news website provides lots of updated information about market behaviors and how you can tackle them. But you should take one step at a time; you learn as you make mistakes.
Crucial Mistakes To Avoid
Like you fall while learning to ride a bicycle, you will make mistakes in your early Forex trading days. But the mistakes shouldn’t be so significant that you cannot recover the loss. That’s why Forex Academy provides a variety of information about this industry and what you should do and what you shouldn’t. Here are a few fatal mistakes that their experts don’t want you to make:
1. Don’t Trade If You Are A Losing Streak
Stubbornness can make you a beggar in no time. So, if a few consecutive trades don’t go too well, try to stop then and there. You should keep two trading tricks in mind: your risk/reward ratio and win-rate. Your win-rate determines your percentage of trades you won during a specific period. For example, if you have 70 successful trades out of 100, you have a 70% win-rate.
Ideally, Forex traders should have more than 50% win-rate. Risk/reward ratio, on the other hand, the comparison between your wins and losses. You should always have more than 1.25 risk/reward ratio.
2. Always Use A Stop Loss
Make it a habit of using a stop loss on every trade. This offsetting order can get you out of a trade if the currency price moves against what you specified in the first place. It helps to cut down a significant amount of loss in case you end up on the losing side.
3. Averaging Down
This is probably one of the common mistakes that newbie traders make. When the price moves against traders, some of them try to average down in the mistaken hope that the trend will soon change.
But adding to a loss is like flushing your money down the toilet. Your loss will get exponentially more significant, and you won’t have anything to do. Ideally, you should take a proper position size and use a stop loss to limit the amount of money you lose.
4. Don’t Spend Everything On A Trade
Yes, some trades might be favorable during a specific period, but that doesn’t mean you should go all in. You will argue that when you have a risk management strategy, going all-in wouldn’t matter. That’s not the right way forward. The experts from Forex Academy advises you to diversify your trades; you never know when the market changes in the split of a second.
Making mistakes and learning from them is okay. But the mistake shouldn’t be so massive that you lose all your money in one game. So, follow these tips from Forex Academy whenever you trade Forex.
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