Forex Spread Betting or Trading is one of the most popular forms of trading and a lot of traders indulge in it. It is an easy and efficacious means to earn some extra cash, but, one needs to be very careful while placing the bets.
As per a research, it has been found out that currency pair traders are right more than 50% of the times, but, when compared to making profits on the winning trades, they lose more money on the losing trades. This is why, the overall loss is more. Also, there are some common mistakes which traders generally make, and most often these mistakes are responsible for the loss.
So, let’s take a look at the 5 most common Forex trading mistakes which one should stop making in order to gain profits.
Holding On To The Losses
One of the biggest mistakes that most traders make is that when the trade goes against them, they don’t close it out early. The trading experts suggest that if a trade starts going against you, don’t hope to convert it into profit, Close it as soon as possible, take the small loss and try again. On the other hand, if a trade is going on well, let it continue for maximum gain.
Not Having A Trading Plan
Many amateur traders start the trading with one belief that it’s an easy way to make money, and if you are lucky, you will even make some money in the beginning. However, if you are not a trading expert, your luck will not continue for very long.
That’s why, before you start trading, it’s important to have a trading plan, as it will not only assist you to manage your leverage, but will also provide you with some well-defined rules for the entry and exit into the positions. If you would follow your plan with low risk trades, you will also be able to evaluate that which parts of the plan support successful trade and which parts need revision. Gradually, with the improvement in the plan after every trade, you would gain the expertise that’s required to trade successfully.
Averaging Down In Forex Trading
Averaging down might be a good strategy when it comes to fundamental stock investment, but, the traders in the Forex market should not use this strategy unless it’s very important. The biggest problem with this trading strategy is that it may double down your losses in the foreign currency trading market, and it can be extremely damaging where the leverage is involved. This is why many people choose to trade stocks using a reliable platform like SoFi so that they can automate their trading software and work on making the best trades possible.
Over-Obsession With short term Movements
Another big mistake made by the traders is the over-obsession about the short term movements. For new traders, day-trading and short term movements offer a great learning opportunity, but, these are not very profitable. Moreover, day-trading is quite difficult to sustain over the long term, and the trading with long term movements is not just more relaxing, but is more rewarding as well.
Not Using A Reliable and well-known Platform
There are many new currency trading platforms which are evolving every day. Most of these platforms market themselves with the lucrative offers that attract traders, but, in the long term, you find yourself in loss. Thus, it’s important to research well about the platform before starting trading. If you have been seeking a reliable trading platform, then you can use the ETX Capital, that allows its users to to trade Forex, along with indices and commodities.
Delve deeper into your research and avoid the aforementioned mistakes to make Forex a steady source of a second income. It’s important to first understand the trading strategies and the common reasons behind losses before risking high amounts of money in trading.