The Most Common Mistakes In Forex Trading

By [http://ezinearticles.com/?expert=Shawn_Sofo_James]Shawn Sofo James

Trading the financial markets, especially forex, is increasingly becoming a popular career of choice for most people. However, there are common mistakes that traders, particularly beginners, make when trading. Here is a description of some of them.

Lack of adequate training is one of the most common mistakes in trading. Many traders jump into forex trading without grasping the ins and outs of the business. As a result, they end up losing a lot of money while trying out different strategies. Before starting to trade the forex market, it's essential that you spend your time and resources in knowing how the market operates. Importantly, you should practice your skills in a demo account before trying them out in live market conditions. Once you've gained enough confidence and perfected your skills, then you'll find forex trading to be very enjoyable.

Next, improper money management is a trading mistake that make traders blow out their accounts faster than they expected. Most traders, driven by the false motive of making quick returns, fail to set their risk parameters appropriately. Specifically, if you use too much leverage on your account, you can amplify your losses. As much as leverage is a good money making tool in the forex market, you should use it with caution. When trading, it's advisable to not risk more than 2 per cent of your account on every trade you enter. You should avoid the temptation of getting rich quick through forex trading by practicing proper money management.

Another common mistake in forex trading is trading without a plan. As the common saying goes, "failing to plan is planning to fail." If you fail to plan your trades, then the results could be disastrous to your trading account. Without a trading plan, you are bound to make trading decisions based on emotions and without much thought. To solve this problem, you should develop a robust trading plan and follow it in every trade you take, regardless of the conditions of the market.

Lastly, is not analyzing your trades, whether they are winners or losers. The forex market is very dynamic in nature and you should capitalize on every opportunity to improve on your trading. And, the best way of doing this is through analyzing your trades. Analyzing your trades will help you identify weak areas you need to work on. As such, you will be able to take your trading career to the next level.

Shawn Sofo James has 7 years experience in the Financial Markets, for PRO Investment Bank as an Investment Analyst, before becoming a Forex trading expert.

If you have more [http://www.fx-insights.com/]Forex questions please post them online.

"My best tip for every new trader is to open [http://www.metatrader.ie]Metatrader demo account that will provide you with a number of opportunities such as trying your forces on the Forex market, learning about trading terminal possibilities and testing your trading strategy with no financial investments".

Article Source: [http://EzineArticles.com/?The-Most-Common-Mistakes-In-Forex-Trading&id=7334046] The Most Common Mistakes In Forex Trading