Mistakes are just a part of successful trading and everyone does it. We have committed many such mistakes the start of our forex trading career and those are the same mistakes that we see most of the beginner traders make. We have seen most of our students commit and repeated these same mistakes which causes them to lose money in forex. Every beginner trader does the same mistake, some of them give up trading after that and some of them are trapped in a loop from which they are unable to come out of.
Below are the top 4 mistakes which every beginner forex trader make and you might be one of them, so go through it and see if you are not making the same mistake.
1. Choosing the wrong trading style
The very first mistake which we made was of choosing the wrong trading style. When we started trading we had little to no idea about what forex trading is, like everyone else we got lured by the luxurious cars and the great lifestyles of forex gurus and we instantly bought their courses. Since we were beginners, we had no idea of the different types of styles in forex trading.
But after losing a huge amount of money and doing some research about forex we came to know that there are different types of forex trading styles and each style is meant for different people. Finally, after knowing about all the different types of trading styles, we realised that until now we were headed in the wrong direction. We trading system which was not meant for us. Many of you might be committing the same mistake but you won't even know it. Hence it is very important that you identify the right trading style for yourself and only trade according to it.
2. Wrong mindset
This is the biggest problem of all the novice traders right now. Everyone wants to get rich quick. And it's not your fault. All the gurus and mentors have portrayed forex trading as a way to get rich quick. Forex is shown and advertised as an industry where you can become rich overnight. Like most of you even we came into forex with a get rich quick mindset. This is because the forex traders or gurus who sell their course portrayed forex trading in that way and it caused us to develop that mindset.
We see traders flashing their Lamborghinis Ferraris and it catches our attention. Most of these guys will show you all the fake lifestyle and all the rented cars and earn money through selling cars. Or even if someone is genuine, and all the cars and lifestyle he/she is showing is real then its not something that they built in a single day or from a single trade, it takes time. But most of the beginner traders get into forex with the wrong mindset and assume forex to be a get rich quick scheme which it is not.
You should really understand that patience, persistence and discipline is the only key to get success in forex trading.
3. Over leveraging your account
We once had a losing day where we lost around $5,000. This was because of overleveraging and if you want to lose $5000 or 100% of your account in a single day as we did then go and overleverage your account the result will be the same. Overleveraging your account will always lead to a disaster no matter what. Or even if somehow, you made a profit by overleveraging your account it was only because you were lucky enough this time and this won't always happen.
So the next time you overleverage, your account is destined to get blown because you weren't actually trading, you were just gambling by overleveraging your account. Trading is a long process that takes time to master, and overleveraging is like a shortcut that beginner traders try to take, and 99% of time ends up making them lose their account. The main reason why most beginners overleverage their account is that they have unrealistic expectations from trading, they are always wanting to become rich overnight, which is not going to happen, and so for these unrealistic expectations, they end up overleveraging their account and blows it.
You need to trust the process of trading and also understand that things take time in forex. Furthermore overleveraging your account is a mistake that you shouldn't make if you are really trying to be a forex trader. So, always make sure you follow a proper risk management plan and use the leverage sensibly.
4. Not sticking to one particular strategy
This is the most common mistake which almost every forex trader makes. Whenever you buy a forex trading course or learn a strategy online after you first trade through it you most probably make some profits at first but then you start losing through the same strategy. When you start losing, you try to add something of your own to that strategy. After this, you again start earning profits and then after some time you again start loosing with the same strategy.
It probably makes you feel that this strategy does not work make you abandon that strategy. Then you search for different other strategies and the same thing happens again. Now you are stuck in a loop where you are just searching for a strategy that never fails. By doing this what you are trying to do is, to look for a holy grail strategy. Trust me, a holy grail strategy does not exist.You just need to look for a strategy that works, and the way to know if a strategy works is by backtesting it with the help of historical data.
After you find a strategy that works, your goal is to master it.
These mistakes are very very common and the main reasons for your failure in forex trading. It is very crucial for you to pay attention to these mistakes and make sure you don't repeat it again. Because a mistake should stay a mistake and not become a habit, but if you don't correct your mistake soon it eventually becomes a habit. So, make sure you correct these mistakes in the early stage of your forex trading career. After you start correcting these 4 mistakes you will see a sudden change in your trading career.