Know the most frequent errors in Forex to better avoid them in an actual situation. Here is our non-exhaustive list of points of vigilance to never forget. How can you know about liquidity provider.
Little or no theoretical knowledge
You should never invest your capital without understanding how the intended investment works. Therefore, many investors who lose their money quickly in the Forex market are individuals who have not taken the time to educate themselves. It is therefore essential to read articles or books dealing with the subject. And not only the books. Read the brokerage reviews such as Soltechx Review to better grasp how the specific brokerages operate.
It is essential to practice opening and closing positions via an online virtual platform, such as a free offer like MetaTrader or ProRealTime, or a demo account integrated into a broker’s offer. Finally, it always pays to show that we do not know something and give ourselves the means to fill the gaps by following training on Forex trading: included in a broker’s offer or paid for by an independent partner.
No Forex trading plan
Any investment deserves a reflection upstream on the conditions under which it will be carried out. Forex is no exception to this rule. It is essential to establish a Forex trading plan before placing your first euro. Such a plan consists of a trading strategy part and a risk management part. It is a concentration of strict rules that will govern every action taken on the Forex market. This plan is not set in stone. It evolves according to the re-evaluated objectives and new technical skills.
Here we will give some examples of the central elements of such a Forex trading plan:
- The maximum amount allocated to each position;
- A deadline for reaching the determined financial objective;
- Disciplined monitoring of each position, of each Forex trading session;
- The conditions required to close a losing position (via Stop Loss);
- The conditions required to close a winning position (via Take Profit).
Random risk management
The risk is sometimes very difficult to assess when a Forex trader enters the market. Lack of practice and knowledge can lead to risky position openings, which quickly jeopardize the profitability of a portfolio. Forex trading is not a casino bet. It is not based on luck alone but on a series of answers to fundamental questions that make sure to increase the success rate and reduce the probability of losses.
Forgetting your goal
Perhaps the most serious mistake a newbie Forex trader makes: forgetting why he started trading in the Forex market. The purpose of opening a trading account, even more in currency pair speculation, is to make money. It is therefore essential to consider Forex trading as a professional activity. It is essential to equip yourself with the technical means and to be bound by strict discipline in order to achieve the set objective. A capital increase of 1% per month or 10% per week must be treated on the same scale. Only the number of positions varies. The amount per trade depends on the capital available.