Forex Errors

  • May 21 2021
  • by
  • Analyst AZA
Forex Errors

What Are Forex Errors?

People try to choose the area that will bring the highest return in their investments.

Those who were previously  who have previously made such investments in areas such as land rent and stock markets are now evaluating their savings in the forex markets.

Forex market operates with data obtained from many financial centers within an online connected system. There are several global data companies that collect and instantly transmit this information from around the world.

All transactions are carried out instantaneously over the data in these markets. Since it is a system that works with the logic of gathering information based on transactions occurring in many financial centers, it does not have a general center. If we list the leading centers in this system, we can give examples such as London, Tokyo, New York, Sydney, Zurich, Singapore, Frankfurt and Hong Kong.
Before you start trading forex to earn money, you need to choose a brokerage firm. Make sure that this institution, which must be CMB authorized, also applies low spreads to you between trades. At this point, do not rely on the opinions of the institutions and search other organizations yourself. In addition, find out which trading areas they will allow you to do. In the parities in exchange rates, each value in ten thousandths after the point is called «pip» (Price interest point). It refers to the lowest price change steps in a currency. Find out how much pips you are authorized to trade.

For example, it could be 6 pips down and 20 pips up. Apart from that, when you are in a very limited range, it will be very difficult to make money from here by trading. To give an example for pip, the fourth digit in the decimal section of 2.8873 is called the pip by looking at USD / TRY parity. And according to the changes that will happen here, you win or lose. The factors you need to be aware of in the Forex market are not limited to these.

It is also of great importance how accurate the forecasting information provided by the brokerage house you choose is. Since you will not have the chance to follow the developments all over the world on your own, you will have to take action by taking into account some forecasts provided by other people or institutions. For this reason, it will be beneficial for you to choose a brokerage firm with high predictions in terms of earning income in this field. Of course, the fact that the information provided by intermediary institutions may not be accurate should always be in the corner of your mind. For this reason, it will be up to you to examine how rational the predictions are. Before starting Forex transactions, you should learn exactly the order types and usage patterns that will protect you in this fast-moving market. In addition to the trainings you will receive, you should try online with real data in demo accounts opened in order to see exactly how the market works. You should also see clearly how much gain or loss can occur when you do what kind of transactions in your trial transactions. You should also use all the orders used in practice and test what kind of benefits they have in the real use area. After all this, you need to determine exactly which types of forecasts provide how much return. After doing the necessary practical work, you can start trading in this market prudently based on rational predictions. Never forget that you should also avoid instant trades during the day. Transactions made without any expectation or foresight are no different from games of chance.What Are Forex Errors? We have had the opportunity to examine the main wrong moves made by new traders in the forex markets.

When someone tells you that Forex trading is easy and you can make tons of money with just a few finger flicks, know that he's broken or quack. Before anyone becomes a successful Forex trader, he will take a lot of hits and make a lot of mistakes because the learning curve here is as steep as possible.

If you are new to trading, make peace with the fact that Forex markets are full of pitfalls. So you can reduce the loss by avoiding the most common trading mistakes we outlined in this article. As Von Bismarck said, «Only a fool learns from his own mistakes. The wise man learns from the mistakes of others».  Learn from these mistakes and get your earnings with you.
What Are Forex Errors?
There is a popular belief that forex trading is no different from gambling. Trading is indeed similar enough to sports betting, poker or casino games. For example, most participants only have poor knowledge of why a particular market will move south or north, or why a particular team or an athlete can beat a competitor. Also, both trading and gambling provide no guarantees for a positive outcome.

But the main difference between the two lies in the fact that foreign exchange trading risks can be mitigated through money management. The skill or art of mitigating the negative impact of opening a position incorrectly, then the market moves in the opposite direction and gets the highest possible profit from the trade if the market moves in accordance with your prediction. Simply put, when gambling, a player has little control over after their bet is placed. Or not at all. Whereas, a currency speculator can control the situation through risk (money) management. Therefore, not being able to learn and apply risk management is the first mistake to avoid when trading Forex. These rules are both good and good to be able to get maximum profit from the market and at the same time keep the balance against a «disobedient» currency pair and make sure a few bad trades will not go away required for bad transactions.

A suitable risk management system in Forex includes many elements, all of which will be discussed in this article. However, it is important to remember that creating risk management rules must be done before you start developing a trading strategy. And most importantly, deviate from these rules only when it comes to force majeure, and always stick to those rules. This not only prevents your trading account from getting smaller. It also instills self-discipline, which is very important for a successful Forex trader. One can be a technical or fundamental analysis wizard. Therefore, without the following risk management formula; The trading account will suffer huge losses due to unexpected market conditions.

Trading Plan is Key to Success
Never trade Forex without first creating a trading plan. Diving into the stormy waters of currency trading without a plan is one of the most common Forex trading mistakes made by many new speculators that then see their trading accounts evaporate. We'll review the intricacies of the trading plan composition in the next section of the article, but as with risk management, it's important to note in advance that always sticking to the plan is a must for anyone who wants to be consistent. Profit from currency trading Calculate the risk / reward ratio
Always consider the risk / reward ratio before entering a position. Calculating this ratio is not overly complicated, but many retail investors tend to ignore it. Often it leads to inconsistent trading and losses even if an investor has a good trading percentage.

For example, you want to enter the GBP / USD market that is currently trading at 1.4500 and appears to be targeting the upside. If the trader decides that he will take profit at 1.4650 while placing the stop-loss at 1.4450, this means he is looking for a profit of 150 pips while preparing to risk 50 pips in a single trade, thus giving us the best 3: 1 risk / reward ratio is considered to be the rate that allows traders to maintain a consistently positive P&Z. Forex traders who routinely calculate this rate are reviewing the markets in search of an interesting game; They realize it forces them to be much more careful and selective. With such a scrupulous approach, you might miss opportunities for instant profit; but it will pay off generously in the long run.Focus on Small Time Zones
Choosing the right timeframe can be a daunting task for newcomers who don't yet understand their trading style. Most of the rookie speculators are very impatient to trade in the daily or even 12 hour time frame because they are eager to act and make quick profits. Therefore, they jump to the 5-minute or even 1-minute chart where price action changes direction very often. And this is what makes one of the biggest but also easily avoidable mistakes when trading Forex.

In order to be profitable in small time periods; You must have a deep experience in scalping which is the toughest trading style. Because it takes a lot of mental stamina to execute dozens of trades every day while read the risk / reward ratio, spread, position size, all in a matter of minutes while the price action is still developing. This requires a lot of competence and discipline that novice investors lack. For this reason, it causes big mistakes because they are deceived by the noise that saturates the time periods.

 

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If you are new to trading, make peace with the fact that Forex markets are full of pitfalls

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