Most Common Mistakes When Investing in Forex

What are the most frequent mistakes when investing in Forex?

The purpose of this article is to discuss some of the most frequent mistakes traders make when they start investing in Forex. If you are starting to invest in the currency market or are thinking about doing so in the short or medium term it is highly recommended that you learn before the mistakes that have already committed many others who have tried before you and study these errors and try to Avoid them.

Among the main mistakes that can lead to the downfall of any trader's adventure and the loss of his capital are the following:

Operate without a plan

Many traders, despite putting their money at risk, operate without a trading plan and without developing an investment strategy that works for them and that can be optimized based on the experience they are getting. This way of operating without a defined course about its investment more to a matter of chance than to construct a true method that can give a reasonable and sustainable result in the time.

When you start investing in Forex, it is imperative that you gradually build your trading plan. To achieve this, you must progressively acquire the basic knowledge you need, evaluate the strategy that can best fit your risk profile and economic capacity, define objectives and create a control (for example, making a trading journal) of all the operations you perform . This way you can analyze the results you are getting and optimize your own forex strategy. This work may seem complicated but as soon as you begin to do it with discipline you will see that it is not so much and the alternative is probably to finish rashly with your capital and without any idea about what has worked or what has failed.

Operate conditioned by emotions

Another of the most common trading mistakes is when it is your emotions that condition the operations you perform. It is difficult to separate the emotions when you are investing but it is key to do so in order to be successful. Euphoria or fear are the worst trader friends. A sense of euphoria may be the prelude to a great loss by keeping a winning operation open for longer than necessary. A succession of winning trades also tends to act with overconfidence that can be harmful. On the other hand, being paralyzed by the fear of losing and not opening positions, closing them ahead of time or not assuming a reasonable risk will make you lose good chances of making a profit.

That is why the previous point, your trading plan, once you have a defined strategy you must isolate yourself from the emotions and operate according to your strategy by opening and closing positions according to the established plan. Many traders are successful trading through automatic trading systems (Forex robots) in which trades are executed automatically based on a series of previously programmed parameters. This way the strategy can be optimized but it will not be affected by the emotions.

Lack of knowledge

Many traders also start investing without the right minimum knowledge. You will not learn everything before you start investing but if it is good that you have a solid base to know what you are doing and to be able to optimize your trading strategy. Today the great advantage is that on the Internet you can find a lot of training material to learn to invest in Forex from the most basic to the most advanced: manuals, forex courses, videos, investment strategies, trading signals,

Many of the online brokers also provide their customers ebooks, organize courses, face-to-face seminars or webminarios through the Internet. You have an infinite number of free materials to build a good knowledge base and you also have at your disposal a large community of users who can solve your doubts in forex forums, blogs, social networks.

Use too much pressure

One of the most attractive tools for a beginning trader (usually with little capital available) is usually leverage. Thanks to this functionality that varies according to each broker and each financial instrument in which you are going to invest, you can start to open operations with small amounts of money that you deposit as collateral while operating in the market with a much higher amount. For example, let's say a 1: 500 leverage in which for every euro you deposit as collateral you can trade and get profits generated by 500 euros (with 100 euros deposited you can get the benefits of operating with 50,000 euros).

It sounds good, right ?, it would be difficult to get a reasonable profit in Forex without leverage and you would need high capital available but it is not all advantages: leverage, if the position advances in your favor can generate important benefits, but also carries a greater risk And can generate considerable losses if you do not hit and the position moves against you. Therefore eye with the leverage to use, do not get carried away by aggressive levels offered by many brokers, be prudent and use it head with the right balance between benefit and risk.

Have unrealistic expectations

While it may seem obvious to think that investing in Forex is not going to generate huge profits with minimum capital, many traders start investing thinking that they can convert € 100 into € 10,000 in a few weeks. Many times the advertising used by some brokers online tends to convey that investing in Forex is very simple, do not need capital and experience is not required. These are misconceptions. Investing in Forex is simple: you can open an account with a broker in a matter of minutes, access the trading platform from your home or from your mobile and open positions quickly but from there to generate profits there is a good stretch. If you do accounts you will see that it is difficult to achieve considerable profits with little capital or at least get it without incurring a very high risk that can end your capital in a matter of seconds if you are wrong.

Investasi Menarik Tentang Forex requires not falling into these mistakes and doing things right: be disciplined, realistic, isolate yourself from the emotions, set goals and have a trading plan, manage a risk ratio - reasonable profit, risk only a small Part of your available capital in each operation and analyze and optimize your strategy based on the experience you are getting.