Forex Strategy Trading Tips: The most typical Forex Trading Mistake and How to Avoid It
Being a Forex trader you’re going to need to develop many different skills as well as developing reactions to different trading scenarios. Sometimes it is easier said than done. After guiding many traders, I have noticed that most of them are unsuccessful at Forex strategy trading for the same reason, they over-trade. So how do you know when you are over-trading? Here’s a quick guide that can assist you to recognize when you find yourself over-trading and ways to stop it.
How many strategies are you presently using?
I’ve met people who were trading between 5-10 different strategy, and of course, there were not making any money, but why is that? Well, the more policies you use, the less you concentrate on the market itself. Getting to know the market and your approach is essential to becoming profitable and consistent, but this is not possible when you’ve got 3, 5, or 10 different strategies to pay attention to.
How much are you risking on every trade?
Understanding how much you’re risking is a lot more important than knowing how much you’re going to make. That’s is why money management is critical. I have seen traders move from the losing side to the profitable side simply because they implemented money-management into their Trading.
How do you feel when you’re making profits?
The most common reply to this question is fantastic, and many people do not realize they’ve become greedy until it’s too late. As human beings, we tend to get greedy when situations are running smoothly for us. I’ve been through it, done that, and the result was not good. When you are getting greedy you will be more likely to act reckless and commit mistakes.
After asking yourself these common questions you must have a much better idea of where you are. Over-trading is really as harmful as employing a strategy with a low return on investment (ROI). Now let’s stress on how you can restrict yourself from over-trading.
Have a Trading Plan
You must know where you are going to close a trade BEFORE you even open it. Also, be sure you have a set of rules in place for other trading variables, for example, take profit levels, stop losses, and progressive TPs.
Learn About Your Trading Style
This is extremely important since the type of MM (money management) you employ for one trading method is different than the one you use for another one. If you are a day trader you will likely use small percentages in each trade (0.5% to 2%) since you are taking a lot of trades.
A swing trader might use a more significant percentage like 2% or 3%, it’s all determined by your trading style and Forex strategy you use for Trading. Due to this fact, learning more about your trading style will help you to be useful as a trader and make better decisions. I’ll be posting more tips on how to avoid over Trading on a future article, thank you for reading and Happy Trading!