Published On: Thu, Dec 19th, 2019

Five mistakes to that can cost your trading capital 

People are trying to make their life better by creating an alternative source of income. But creating a steady source of income is not all easy. You might have the skill but still, without having the right connection, you won’t go further. For this very reason, the smart people in Australia often consider trading as their profession. Many people have created a stable alternative source of income just by learning to trade the market. However, you need to be careful with this profession since you can lose your entire investment within a few months. Let’s find the key reason which can cost your trading capital.

Taking more than 5% risk

The aggressive traders love to trade the market with more than 5% risk. They think this is the only way to make some huge profits. But the professional traders are always trading the market with a 1% risk. Many people often trade with less than 1% risk. There is no reason to follow the aggressive trading strategy in trading. You can use the high-risk reward ratio trade setups and make some big profits even with a small lot. So, stop risking too much in the trades.

Trading against the trend

Placing trades against the trend can cost you a big sum of money. Those who are well established in the trading business, never place any trade against the major trend. Most of the time, the follow the conservative trading technique. Learn about the different phases of the market trend and you will be able to reduce the risk exposure to a great extent. Becoming successful in Forex is not all hard. If you start trading the major trend it won’t take much time to make your life better. But if you trade the tops and bottoms, you are going to lose most of the trades.

Overtrading the market

Overtrading can be very dangerous. Most of the retail traders are overtrading the market to earn more money. But if you want to succeed, you must focus on quality trade execution. Becoming a better trader depends on the quality of trade signals. And to find quality trade you must analyze the daily and weekly time frame. This might be boring and you might say the scalpers are making a profit by following the process of overtrading. But if you ask them or analyze their trading strategy, you will be surprised to know they are using the most delicate method to analyze the market data. They are more precise than traditional traders.

Getting addicted to this market

Becoming addicted to the Forex market is one of the main reasons for over trade the market. You need to develop a trading routine so that you don’t become addicted to this market. As a currency trader, always remember, the discipline has its value. Write down the rules and follow them. You might have to lose a few trades in a row but this should not make you frustrated. Mastering the art of trading requires patience. Be a confident trader and learn from the losing trades. And stop being addicted to this market as it will cost your entire investment.

Lack of knowledge

Very few traders understand why this market moves. Most of the time they buy signals from the professional traders and try to make money. When things fail, they buy expensive trading strategies and again lose money. You need to gain knowledge to become better at trading. If you fail to gain knowledge about this market, don’t expect to make a profit. For instance, without having the perfect knowledge of three major forms of market analysis you are going to lose the entire investment. So, think twice before you start to trade the real market. If you feel confident with your patience level, start learning the details. Once you get skilled, you will become a pro trader in the Forex market.

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