There are many things that can prevent a forex trader from becoming successful, but one of the worst is being their own worst enemy in Forex trading. Many traders sabotage themselves by developing bad habits that can cause them to quickly become bankrupt. Let’s take a quick look at some of these habits and how you can take them in order to be a more effective trader.
Refusing to admit that you can be wrong: – The best traders put a lot of work into their trades, making complex analyses of the markets in order to identify trading opportunities, but there are times when, despite all the hard work that you put into identifying it, a trade can go against you. In this case, you should not hesitate to let go of it. One of the worst things that you can do is to become stubborn and insist that you must be right, since you performed all that analysis. Don’t keep this trade open in the belief that it might still work out.
Not letting your edge play out: – Fear is one of the worst emotions a trader can experience. As a result of fear, a trader can become timid and not let a winning trend play out even though they can clearly see that it is taking place. This is the opposite of that other bad habit traders have – namely, chasing their losses. Both of these things happen because the trader does not have the self-discipline to pull back and do what is right. You should realize that letting your edge play out is not being greedy but taking advantage of the trend to make a profit.
Using too much leverage: – Leverage is a necessary evil for a forex trader, since without using it, the profits he makes are minimal, unless he has a lot of money to trade with. However, many traders still have that gambling mentality where they still believe in making the big score that will net them a huge payoff. Thus, they use too much leverage in the hope of greatly magnifying their profits. But they also expose themselves to correspondingly greater risks and inevitably end up going bankrupt. The best traders are those who strive to be consistently profitable and thus, are content with making smaller profits on their trades.
Basic tips have been taken from http://www.xe.com/currencytrading/ and http://www.mtrading.my/education/