Depleting your capital account with your online broker is undesirable.
As an inexperienced trader, what are the ways that you can cut out mistakes and limit trading losses?
We highlight what essential controls need to be maintained to at least give yourself a chance to make profits as a forex trader.
Essential controls to avoid trading mistakes
1 Master one strategy at a time
If you are new to forex trading, trying to learn too many strategies could slow up your learning process and cause losses on your trading account.
As you become more experienced, it is reasonable to use different trading strategies, but at the beginning, master one strategy at a time.
2 Simplify your trading
Novice traders tend to overcomplicate trading creating technical indicators and trying different expert advisors. If you use chart software, your chart may obscure by all the technical indicators flashing up on the screen.
It is best to focus on the raw price action that presents itself on every chart. Learn what the price is telling you, and the simplicity of trading will become apparent to you.
3 Avoid trading in different markets
Novice traders tend to trade on multiple markets with little understanding of the market. Known as noise trading, traders enter trades without the proper technical or fundamental research to justify the trade. If you want to trade on different markets, it is essential first to trade them on a demo account.
4 Over leveraging positions
Inexperienced traders are often susceptible to using too much leverage in their trades. Online brokers offer levels of leverage that put the capital account of a new trader at risk. Leverage of more than 100:1 is not uncommon. As the amount of leverage magnifies the profit and loss on a trade, it needs monitoring.
5 Lack of research
Proper research of a currency pair or currency market is essential to trade successfully. In-depth analysis should shed light on entry and exit timings and market trends. There may be slight differences between currency pairs and how they work. Detailed research is essential to put a proper strategy in place.