Unknown Trading Mistakes Done by the Beginners

Forex has become attractive to the beginners gradually and investors are joining here day by day. Making a huge amount of profit is a lot easier here if the research work is done greatly at the beginning. Beginners do not understand the common pitfalls in trading and for this reason, they suffer greatly in the long run. If the general pitfalls of that are understood from the beginning, it may help to provide the best result in the lowest endeavor. Today, we will discuss the common mistakes of that.

Trading mistakes:

1. Overtrading

One of the greatest mistakes done by the newbies is to trade continuously without any prior thinking. They buy the financial instrument based on short term goal which may make their account balance zero in the long run. Due to overtrading an investor may lose more than he can earn. Experts avoid the tendency of the execution of the trades repeatedly and set specific deadlines for trading.

2. Demo account

This may work as a great tool but beginners do not care for the utilization of this tool. It can work as the test lab for the traders to trade and he can upgrade his strategies easily with that. The good side of using a demo account is huge as the investor is using fake currencies here which does not affect his real account. He does not have to take any responsibility for profit and loss.

But, this is a matter of sorrow that most of the rookies are very callous to use the demo account at the beginning to learn about the Forex market. Without having any practical knowledge, they fail in the real life.

Many top traders in the stock industry have mastered the art of trading by using the demo account. They can easily predict the price movement of the major stocks just by analyzing the chart. Such skills can be easily develop by using a demo account.

3. Stop loss

This technical tool work as the live savior in trading but most of the investors become very careless about it and do not set a stop-loss point in the chart. Stop-loss point indicates setting up a point below the moving average which may help to protect the trade by closing it automatically when it touches the exact limit. Rookies do not set a stop-loss order point and make the trading unsafe. During a bearish trend, he may lose a great deal of money in such a way.

4. Leverage

Beginners become very greedy and take the high leverage facility from the brokers. Taking leverage may work as the two-way swords for the investors as it increases the risk to a greater extent. It is often found that high leverage has compelled a trader to close the account during the downtrend.

The investor must keep in mind that he is taking the leverage from the investor as a loan and he has to repay the money later. If the expected amount of profit is not achieved and a great loss is faced by the investor, he may have to return the money from his real account. This type of incident makes the balance zero which may lead to the trading career to its end.

4. Takeprofit

Due to greed some of the traders do not set a take profit order. This option can help the investor to close the trade automatically according to the expectation of the investors. Every trader should know what his its goal is and according to that, he must set the take profit point near to the moving average.

To conclude, we may say that beginners do not try to study about the Forex before executing the trades on the real account. They must be aware of the common pitfalls and mistakes regarding FX trading to make the best utilization of the time to make a great profit.