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Amateur Traders Typical Mistakes


Often there are a large number of mistakes that many novice traders make, this article will focus attention on two of the most typical mistakes. While forex trading can bring in a lot of profits, it can also lead to horrendous losses for those who are not prepared.

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One of the first mistake is relying too much on the forex trading robots, especially their track records. As amazing as it sounds, many novice traders believe that they can make successful decisions based on the records which have been made by forex bots. If you have encountered these bots, you may have been tempted to use them yourself.

There are a number of reasons why making trades based on forex bot records could lead to critical error. Ironically enough, when you read the warnings and disclaimers that come with these bots, they often tell you why they are often inefficient and the performance results are subject to numerous limitations.

The results which are simulated are not a representation of true trading. Because the actual trades themselves have not actually been carried out, the results that you may receive when making the same trade can be drastically different from those which have been simulated. No bot track record which claims to know the prices of a currency at closing should be trusted.

Many of the companies which advertise forex trading bots make use of slick advertising in order to sell, and many traders do not take the time to question whether or not the bots have actually been traded.

According to many of these ads, all you have to do is sit back and relax, as the trading system automatically generates thousands of dollars a week, even though you paid less for the program. It is easy to see why these bot trading programs are nothing more than scams, and they are marketed to either the incredibly naive or those who think they can make money without doing any work.

First off, the key thing that you must remember is that all the forex trading bots that companies may try to sell you are fakes. Why would a company sell you a program for a few hundred bucks that makes thousands per month (as they often claim), when they could simply use the program for themselves?

If the program is as good as they claim, why do they even bother selling it? There is no shortcut to wealth, whether you are forex trading or making money in some other manner. If you want to become wealthy, it will take time, effort, and sacrifice, and any shortcut which someone tries to sell you will make them rich at your expense.

The "Myth" of Day Trading

If you have read any reliable books on investing, one thing that you should know is that in the short term, the markets are always extremely volatile. In fact, in the short term, the prices of any currency or stock is completely random, and there is no program or software which is able to give you an edge.

Many mathematicians have shown over the years that in the short term, it is impossible to predict the moves that any investment will make, and any programs that claim to do so are ineffective. Despite this, the myth of day trading lives on, the idea that you can make reliable trades daily which can bring you substantial profits.

Not only will day trading cause you to lose a lot of money within a short period of time, but it will also cause you to pay more in taxes. While the IRS charges less in capital gains taxes for investors who hold onto their shares for at least a year, they charge as much as 25% for those that sell their stocks within a year. This means that not only are day traders attempting to bypass the laws of mathematical probability on a daily basis, but they are also being hit with a heavy tax burden at the same time!

Having said that, it is simple to see why day trading is a foolish mistake, particularly for those who are currency traders. In the short term, you can't beat the market, period. If you do, you just got lucky, and your luck will eventually run out.

There are three main characteristics which cause traders to lose big in the forex market, which are - laziness, greed, and being naive.  These three characteristic makes traders assume that forex trading is "simple".

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In any event, being greedy, lazy, or naive is a quick way to lose every penny you have worked for in this market. In the forex market, just like everything else, there is absolutely no substitute for hard work. Anything in this world which is easy to get is not worthwhile. Anything which takes a lot of effort to achieve is something that you will have to work for.

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