3 Bad Forex Trading Habits
Every time a trader has an adventurous Forex trade with lots of ups and downs, he makes a resolution to be careful the next time and practice a cautious approach. But with the Forex fever in his blood, he is rarely able to keep his promise. These bad habits have been ingrained into him since he was a toddler in the game and he finds it impossible to get rid of them. These bad Forex trading habits can be broadly classified into three heads as discussed below.
This is the worst habit that many currency traders have. If you do not have this habit then it is probable that you are a millionaire with the profits that you have made in the market and can now afford to sit back and relax. Or perhaps, you are using the automated system with the stops at both ends.
When a trader places one trade after another indiscriminately and too aggressively without any discipline, it is known as overtrading. When you are chasing the profits, you tend to overtrade. This is an expensive habit and you will find yourself up at all hours of the night and day. The best way to break this habit is to develop a game plan. Having a strategy will discipline you and help you actually earn profits.
Not many people are aware of what this term means. Everyone has heard of it but thinks that they do not have this bad habit. Over-leveraging occurs when you put all your equity in one single trade. When you are glued to you computer screen following every single movement of the trade, you keep on adding money to your trade, till you finally over leverage.
Trading requires a discipline and the ability to move away from a trade that is frustrating and come to it when you are in a calmer state of mind. There are three ways to break this bad habit – by having a strategy for trading, placing stops and disciplining yourself to walk away after placing the stops at both the ends.
Not having a trading strategy:-
This is the mistake that all traders, even seasoned ones, make. Not having a strategy or a game plan leads to overtrading and over leveraging resulting in placing more equity on a single trade or opening too many trades. Isn’t it difficult to drive if you do not know the way? Research the market carefully and study the charts before developing your trading strategy.
The best way to trade is to place a trade and then place the stops at both the ends. Now, let the stops take care of your trading limits. You will not indulge in your bad habits and be a better trader for that.