3 Common Forex Investing Mistakes

3 Common Forex Investing Mistakes

The unfortunate reality of the financial markets is that most new traders lose money in their initial attempts to capitalize on bull or bear rallies.  But the fortunate part of this reality is the fact that most new traders will make the same mistakes over and over until until we get to the point where the repetition becomes predictable.  Once this occurs, it becomes easier to start to identify the types of behaviors that will typically result in quick losses for new traders.  Here, we will outline three of these behaviors so that newer traders are better able to identify these traits within themselves and to hopefully remove the negative acts that can get in the way of market profitability.

Maximizing Leverage

One of the newest features of modern trading is the massive leverage offering that is provided by many market brokerages.  This essentially means that traders are able to command much larger positions sizes when taking an active stance in the market.  Over-leveraging can create significant gains in a short amount of time, but it can also create significant losses just as quickly.  For these reasons, leverage should be used with a mostly conservative mindset as this is something that can easily bring destructive volatility to a trading account.

Failure to Demo Trade

The next major mistake is the failure to demo trade.  Demo trading allows new traders to practice their strategies under live market conditions using virtual currencies.  This removes the risks that are associated when dealing with real money trades.  Companies like Mocaz.com offer traders a good deal of flexibility when looking to open a mini forex trading account, so this is one name that could be considered when newer traders are looking to use virtual currency platforms.  Demo accounts can be great when new traders are still looking to refine their techniques, so this is not a mistake that should be made in a trader’s early stages in a trading career.

Find a Mentor

Last, it is always a good idea to find a trading mentor.  A mentor will best prepare you for unexpected volatility in the market.  Once you are better able to find points of massive price movements in the market, it is much easier to avoid the losses that are typically associated with these time periods.  Trading mentors will help you to see which methods are working best and which are failing, so it always makes sense to find someone that has more experience using your strategy and then to gain as many lessons as possible before trading with real money in the financial markets.

 

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About the Author
Richard Cox is a university teacher in international trade and finance. Lessons in macroeconomics and price behavior in equity markets. Trade ideas are generally suggestive of time horizons of one to six months.

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