Forex Confessions Of An Over Trader

Forex Confessions Of An Over Trader

Hello everyone. I have a confession, I am an over trader. I often make too many trades per day and when I get bored I like to try out different trading ideas. This is the song of many who have and willing continue to lose money trading Forex. Over trading is one of the biggest issues that new and some experienced traders have. Unfortunately, the more many people trade, the more money they lose. Do you like losing money? I doubt that you do. This article will explain why you have to stop trading so much. This is your intervention.

The more decisions a trader has to make, the more mistakes he will make. This is a simple truth that you must understand. When it comes to trading, you want to make as few decisions as possible. You want your trading system to have already decided why you enter and exit a trade. More importantly, you want your money management system to allocate how much money you risk on each trade. These are the types of choices you do not want to make on the fly. You fail and the Forex bullies will have all your money.

Stop giving away your money to the Forex bullies!

Why do we over trade? I know that for me, I love the excitement of trading. I like trying to take money from the market and I love to tinker with different trading concepts. The problem is that I shouldn't be making any trades that do not fall within the confines of my trading system. To be a good trader is to be disciplined and to stick to your strategy. Initially, I lacked the discipline to do this but after blowing up several Forex accounts, I am discipline.

Please learn by mistakes and don't lose all your money like I did.

There is away to tinker!

Yes, we are over traders and we promise to stick to our system. We also need a place to test new systems and strategies. My suggestion is to create  a separate account with a small amount of money that you use to test out your new ideas. I always keep my trading size and leverage low in this account because it is more to test ideas than to make income. In this account I try my more riskier methods and I quench my thirst to trade and my need for speed. I suggest that you setup a similar account.

As you can see, over trading is a disease that many traders have. I am a sufferer but I am slowly getting better. We should aim to trade more so that we can stick to high probability trades and not waste away our account gambling and experimenting. I do understand that there has to be away to test out new ideas and because of this I recommend a smaller account that you use for research and riskier forms of trading. This gives you the best of both worlds.

Forex Mistakes That You Should Avoid

Forex Mistakes That You Should Avoid

All forex traders make mistakes, but the successful traders learn for the mistake they and others make.  It is important that you know about some of the common mistakes made by traders so you can learn to avoid them.  One you know what these common mistakes are you will be able to trade around them and lose less when you are trading.

The first mistake that many traders make is averaging down.  Averaging down is a technique that many traders come across where a position is held even when it starts making a loss.  The trader will increase the amounts in the trade and wait for a turn in the trend.  This technique is dangerous and often leads to more losses than gains.

The second mistake that many traders make is pre-positioning their trades before economic news is released.  There are certain economic new reports that affect the way the forex market works.  It is recommended that trades be closed before the news is released because of the fluctuations that can occur.

The mistake that a lot of traders make is thinking that they can predict what the market will do.  There is no way to accurately determine what the market will do in the future.  To avoid this mistake you should never open a position before the news has been released and you can see what the market is doing.

The third mistake that trader make and the second one related to the news is trading directly after the news has been released.  Once the news has been released a trend usually starts.  However, this is often a false trend which reverses before picking up again.  When this happens traders are often stopped out and they lose the edge they had with the position.

The fourth mistake that many new and experienced traders make is to risk more than 2% of their account balance.  It is recommended that you never trade more than 2% of your account as part of you risk and money management.  If you risk more than this when you hit a string of losses you could potentially lose your entire account balance. 

When you calculate what 2% of your account is you should include any leverage you are going to use.  While leverage increases the return you may make it also increases what you stand to lose.  You must take the amount of leverage you are using in the trade into account when you calculate what 2% of your balance is.

The fifth mistake that traders make is having unrealistic expectations.  A common myth about the forex market is that you can make money quickly and this is not true.  You should expect a realistic return on your time and the amount of money you are putting into your trading.  It is very hard to make large amounts if you are invest very small amounts of capital.

There are five common mistakes that new and experienced forex traders make.  When you know what these mistakes are you can easily avoid them and be successful in your trading.