Getting your feet wet in the forex market can be kind of like swimming with sharks. Right now, you probably feel like a minnow. Don’t worry – we have a list of the more common traps you might encounter. Avoid these while you learn forex, and you’ll avoid getting eaten alive.
Trap #1 – Trade without practicing. One of the worst mistakes a new forex trader can ever make is diving into the market with a wad of money and no practice. Take advantage of the dozens of brokers and forex system providers and use the offered FREE demo accounts – simply the best way to learn to trade forex. Using virtual funds on the live market, you can practice all you want and not lose a penny.
Trap #2 – Getting caught up in the excitement. Sure, trading the fx market is exciting, but don’t let your emotions drive your decisions. The key to making money on the forex is control. The moment you ignore your analysis and base your decision on emotions, you allow your emotions to control the trade. That emotional trade might work once, maybe twice, but it won’t hold up in the long run. It sounds boring, but thorough analysis is the key to long-term success as a trader.
Trap #3 – Doing it alone. The world of forex is a financial subculture all its own. Millions of websites are dedicated to forex trading and nothing else. Take advantage of the knowledge and experience of other traders and sign up on a forex trading forum. Ask questions and listen to advice. Take a set of online classes or attend a webinar. You’ll find that you have a lot more company than you first thought.
Trap #4 – Not analyzing the market before trading. You might sometimes feel as if you are on a good run, or you’re bored with all the study that goes into forex index trading. You might be tempted to skip the analysis and go on your gut feeling. That might work once, even twice, but chances are, it will catch up to you.
These are just a few of the more common traps that new traders can fall into. The key to finding your place in the forex market is to be aware of what to do – and what not to do – and you will stay on target.
Forextips.com is committed to educating the forex trader in all aspects of foreign currency trading. Click here to get information on a free forex webinar to help you maximize your success in the forex market.