Mistakes in Trading Forex

There are little mistakes in trading Forex and there are big mistakes in trading Forex. The big mistakes are more noticeable but it just may be the little mistakes in trading Forex that are keeping you from making money trading currencies! Really big mistakes include falling for Forex scams in which turn out to be pyramid schemes. If someone promises to trade your money in the Forex markets and promises limitless and continually great returns they are simply lying. The biggest mistakes in trading Forex are to believe in the proverbial free lunch. Similarly, when you trade your own money you need to treat it as a business and pay attention every minute. This is where the little mistakes in trading Forex start.

Homework and Practice

Someone asked a famous pianist why he practiced the piano eight hours a day when he was world famous. He replied that if he did not practice for a month the audience in the concert hall could tell the difference. If he did not practice for a week his accompanist could tell the difference and if he simply skipped one day of practice he could tell the difference in his skills. Think of this example when you are uncertain about a trade, forget to set your stops or do not research a tip before acting on it. You can have what has been proven to be the most successful Forex trading system in the world. And you can lose money if you do not pay attention to the basics. You can know everything that you need to know and you can have a great system but if you do not practice you are making one of the biggest mistakes in trading Forex.

Trading Live and Simulation Trading

Many traders think of simulation trading as what you do in order to learn the mechanics of trading foreign currencies. For many it is how to master the skill set needed to work at a trade station. The problem with this way of thinking is that skills decay when not used and the real trading world is not where you want to practice your skills. The pure fact of the matter is that many trader trade too much and too often. They do not wait for clear trading signals and they do not do the research to help them choose the most profitable Forex pair and know when to trade it. They trade compulsively in the belief that their trading software will make money for them if they simply follow the cues. But, if you are waiting for a big move in a currency pair you will want to think about the trades that you will make and you will want to practice them in in simulation. You will not want to risk your hard earned capital on random trades as you wait to execute the most profitable trades. Of the many mistakes in trading Forex this is the worst. Traders bleed away their capital on repetitive poorly thought out trades and do not do the homework and practice the skills necessary for truly profitable Forex trades when the time and circumstances are right.