There’s no time as dangerous in your trading career as when you’re just starting out. New traders tend to make many mistakes and many of them lose so much money that they leave Forex forever, believing it’s all a scam. Often, they’re so traumatized that they can’t stand the thought of ever trading again.
To make sure this doesn’t happen to you, I recommend going over the following trading mistakes that many Forex beginners tend to make and making sure you’re not guilty of making any of them:
1. Thinking you know it all – Trust me, when you begin trading you’re practically ignorant. Even if you’ve taken a good course for beginners, like Forex Nitty Gritty, for example, you still know very little about the market and you must develop your experience and hone your skills over time. So, don’t get cocky. You’re still in basic training.
2. Using insane leverage – It’s very tempting to trade with a 400:1 leverage as some brokers offer. However, when you’re using such a high leverage, you’re putting yourself in tremendous risk. A small shift in the market in the wrong direction and your loss will be multiplied by 400. Trust me, this can wipe out a significant portion of your account. Until you become more experienced, stick to low leverages. Up to 20:1 at most.
3. Buying everything under the sun – It’s good to invest in your knowledge and to get some Forex trading tools. However, don’t jump from one product to the next. Make sure you study each course as it should be studied and make use of each method and really master it before expanding your tool arsenal. Beginners tend to try to find the next best thing all the time, but they never stick with any product long enough to see if they’ve really found anything worth using. Don’t make this mistake.
4. Test, test, test – I don’t care how good a product looks or how much it’s advertised to be able to make. It hasn’t worked for you yet, so make sure to test it well. Demo test each new system before moving on to a micro-account and test it some more. Only after you’re sure you have a good tool or system should you begin trading large sums with it.
5. Giving up too soon – Forex is a tricky business and you may suffer great losses, especially in the beginning. However, don’t be quick to give up on yourself. Use losses as learning experiences and work hard on your trading education and skills. Only by being determined will you be able to fulfill your Forex goals.
These are not the only mistakes new traders are prone to make but they’re a good place to begin making yourself a better trader.
