Analyzing Forex Trading Learn to Make Money

Takes a look at common mistakes made in Forex trading that cause traders to lose money. He also
shares strategies that can be used to avoid making these mistakes

Huge amounts of money can be made trading Forex. While profits are definitely there for the taking,
this article was written to help you learn how NOT to make the common mistakes of a losing trader. Being
aware of these mistakes, combined with a solid trading plan can lead you to success more quickly. We see traders make these mistakes time and again. If these losing traders would just take a step back and consider why they are making these mistakes, they could turn the corner and become profitable. The following list contains the most common trading mistakes that we will cover in this article :

 1. Not using a “Forex trading plan”

2. Not having a money management game plan

3. Not using protective stop loss orders

4. Closing winning trades early and letting losing trades run

5. Overstaying your position

6. Averaging a losing trade

7. Increasing your risk with success

8. Overtrading your account

9. Failure to take profits from your account

10. Changing your trade plan in mid-trade

11. Not having patience

12. Not having discipline

Now, let’s dive into each one of these areas one by one.

1. Not using a “Forex trading plan”

Any coach in any sport will tell you, “You must have a game plan!” Well, the same thing is true in trading. I am
in constant contact with hundreds of traders and I am truly baffled that, trade after trade after trade, one of the most common mistakes a trader makes is not having a defined trading game plan.
 
A trader who thinks a market is about to go up will usually say something like –“I think the EUR/USD is going up to $1.3000. Where do you think I should buy it?” My response is usually something like, “What are you risking on the trade? In other words, “Where are you going to get out if you are wrong?” Often the response is silence, or perhaps a puzzled “Huh?” No thought was ever given about being wrong or where to place the stop. My next question, “If it does go up, how and where are you going to get out?” I often receive the same response. More than 90% of the Forex traders that I come in contact with have no trade plan. 

That means that they do not know what to do if they are wrong and they do not know what to do if they are right. The large paper profit they made often turns into a large realized loss because they did not know where to get out. The most important move a Forex trader can make is to develop a trade plan, before entering the trade. The trade plan should consist of these guidelines.
 
• Know how and where you are going to enter a trade.
• Know how much money you are willing to risk on the trade.
• Know how and where you are going to get out if you are wrong.
• Know how and where you are going to take profits if you are right.
• Know how much money you are going to make if you are right.
• Have a protective stop loss in case the market does the unexpected.
• Have an approximate idea of when a market should meet your trade objective. When should the market
begin to make its move, and if it does not move as expected, get out!

Continued : Not using a “Forex trading plan”