1 IGNORANT OF NEWS EVENTS
Most ignorant technical traders often have there trading account badly damaged if not wiped out during news event releases. I therefore recommend that you get familiar with economic calendars even if you do not like trading them.
2 OVER TRADING.
Most ignorant traders often over trade in any of the following ways: opening more positions than they should, not knowing when they have exceeded there trading limits. I recommend trading only one position at a time as a beginner.
3 NO TRADING SYSTEM
One of the worst things that can happen to a trader is to chase after pips or dollars without a proven system. To succeed in trading you need a proven and tested decent trading system.
4 NO TRADING PLAN
A plan gives you the road map to your destination. When you have no plan, you will surely not know when you miss the way.
5 NOT KNOWING WHERE TO PLACE STOP LOSS ORDER And have high probability for profits
It is one thing to place stop loss orders, it is another thing to know where to place them in order to avoid being stopped out before price resumes in your analyzed irend and entry direction.
6 NOT KNOWING HOW TO MONITOR MARGIN ACCOUNT.
If you do not know when your account is running into margin call, certainly you will not know when to cut your losses..
7 NOT KNOWING HOW TO IDENTIFY A TREND AND RIDE WITH IT.
You trading system should be able to identify new market trends and , trend corrections and trend reversal.
8 ALLOWING MAXIMUM DRAW DOWN ON AN ACCOUNT
When your account is drawn down by say 50% in one trade, you should know that it will not take you a profit of 50% to return to your previous balance. It will rather take you 100% profit in your remaining balance before the account was drawn down.
The above 8 mistakes put together can result in a margin call.
One thing that contributes so much to the failure of many in taking lasting profits from the forex market is ignorance about what steps to take when making trading decisions. Let us quickly go over to 5 secrets steps to a profitable forex trading career.
STEP1: learn to plot the charts.
If indeed you truly want to have an enduring forex trading career, there is need for you to learn how to plot charts on all time frames. The type of chart you plot are determined by your trading system and strategy. charts are easier to plot on the metatrader4 trading platform.
STEP2: Understand your set up conditions
These are conditions you need to spot before you enter a trade. This is one area many traders are led astray. A trader has to wait for his or her set up conditions to be met before initiating a trade. Most traders make money and give it all back due to failure or in ability to follow the set up conditions included in there trading system.
STEP3: Know your entry points.
These are price levels which offer high probability entry opportunities with low risk. certain trading tools can be of tremendous help in determining these levels. A good and decent trading system should provide you with these tools.
STEP4: Know and respect using stop loss.
Once you have entered a trade, your first aim should be to protect your account. To do these you need to place stop loss order. Please ignore any trading system that encourages you to trade without stop loss order. A decent system should guide you on the best level to place your stop loss with higher probability of winning the trade, you might also choose to use trailing stop to protect your profit. Trailing stop helps to adjust your stop loss order if the trade is moving in your favour.
STEP 5: know your take profit.
As soon as your trading system generates signal, it should be able to give you the profit potentials of the trade. Please note that guess work is not allowed in trading. Guessing can be very dangerous to any trader. You need to run thorough analysis before accepting take any trade with high probability.
Remember you do not need a perfect trading system to be a successful trader. Adhere to these rules and the trade will be in your favour most of the times. Visit www.forexandoil.blogspot.com for free forex trading signals and education. plus how $5100 was turned to $40,000 without lifting a finger
Most FOREX traders rely on analysis to make plan their trading strategy. This article will discuss fundamental analysis. The other common form of analysis is technical analysis. After reading this article you should have a better understanding of fundamental analysis and how to use it as part of your FOREX strategy.
Political and economic changes are the basis of fundamental analysis. These can frequently affect currency prices. Traders that take advantage of fundamental analysis will gather their information from a variety of news sources. They are looking for information about unemployment forecasts, political ideologies, economic policies, inflation and growth rates.
Fundamental analysis will provide you with an overview of currency movements and a broad picture of the economic conditions. Most traders then will combine their fundamental analysis with technical analysis to plot actual entrance and exit points as well as confirming the information provided by their fundamental analysis.
Just like most markets the FOREX market is controlled by supply and demand. Many economic factors can affect the supply and demand but the two most critical ones are interest rates and the strength of the economy. The over all strength of the economy is affected by changes in the GDP, trade balances and the amount of foreign investment.
There are many economic indicators released by government and academic sources. These indicators are usually released on a monthly basis but will sometimes be released weekly. These are pretty reliable measures of economic health and are closely followed by all traders.
There are many indicators that are released but some of the most important and commonly followed are : interest rates, international trade, CPI, durable goods orders, PPI, PMI and retail orders.
Interest Rates - can cause a currency to either strengthen or weaken depending on the direction of movement. In some cases high interest rates will attract foreign money, however high interest rates will frequently cause stock market investors to sell of their portfolios. They do this believing that the higher cost of borrowing money will adversely affect many companies. If enough investors sell of their holdings in can cause a downturn in the market and negatively affect the economy.
Which of these two affects will take place depends on many complex factors, but there is usually an agreement among economic observers as to how the current change in interest rates will affect the general economy and the price of the currency.
International Trade - If there is a trade deficit (more items imported than exported) it is usually considered a negative indicator. When there is a trade deficit it means that more money is leaving the country to buy foreign goods than is entering the country and this can have a devaluing effect on the currency. Usually though trade imbalances are already factored into the market consideration. If a country normally operates with a trade deficit then there should not be an affect on the currency price. The currency price will normally only be effected by trade differences when the deficit is greater than the market expected.
The measurement of the cost of living (CPI) and the cost of producing goods (PPI) are a couple of other important indicators. You should also watch the GDP which measures the value of all the goods produced in a country and the M2 Money Supply which measures the total amount of currency for a country.
In the US alone there are 28 major indicators, these can have a strong effect on the financial market and should be closely watched. This information can be found many places on the internet and is provided by many brokers.
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