Plunk Trading Plan
The first common mistake is not sticking to trading plan. Each entry made without pre-determined criteria is most likely to be doomed. When trading forex you have to know exactly what to buy or sell and wait patiently for the right moment.
Greed, impulse and emotional trading are your worst enemies. Dumping your rules after couple of losses and impulsively chasing the market usually hurts to the last cent! Abandoning your mind results in too soon, too late or too much!
Squeezing Out Trades
Another pitfall is staring at charts and deliberately trying to squeeze out a trading signal that isn’t even there. It is important not to lose the objective – some days there are many signals to explode, and sometimes there is nothing at all.
Boredom should not be a factor for trading. My advice – every time you put a trade always ask yourself if this particular trade makes sense or you are simply forcing it.
Hesitation and Fear
Hesitation and fear are in human nature. One of the issues many forex traders face is not entering a trade when supposed to. My solution is to keep a journal of all trades. You can then analyze and revise all of the past decisions and become more confident regarding the trading plan.
Solid proof of a trading strategy that works is the best way to build up the courage and convince a trader to enter the next time opportunity strikes. Speaking of proof, keeping the trading journal is the best way to figure out whether there is in fact a flow in your system. And if there is no flow and your decisions are reliable, only fear and hesitation are responsible for keeping you from profits.
Anticipation of a Move
Confirmation can save you a lot of money and headache. Here is another mistake that many forex traders endure – anticipation of a move. I say, always wait for a confirmation before you enter a trade. Keep in mind that you should “trade what you see, not what you think”.
Overall entry/exit is just a small fracture of forex trading. Without strategy, full understanding of patterns and technical analysis, stop loss, army discipline and careful planning based on experience, entry is worth nothing. However, understanding and analyzing entries should increase your self-awareness, show the way to more accurate signal identification and better decision-making.