Starting something new is a very challenging task. Think about your first day at school. It’s obvious that you were very excited at the same time you had tons of confusion in your mind about the environment. In the first few days, you must have gone through ups and downs, soon you managed to cope up with the school environment because you were a regular. You were adamant to learn things by heart and just for this reason, you are reading this article. Similarly, the pro traders in Hong Kong have faced many problems in the early stages of their careers. But they never become frustrated and stop believing themselves. They have worked hard and learned things from their mistakes.
There are many mistakes that you can make as a currency trader. Let’s explore the top 5 mistakes they make so that we can scale our trade in the learning stage.
1. Avoiding the use of stop-loss
Naive traders are not used to accepting losses. They avoid the stop loss so that they can make a decent profit without losing any trade. This is a very big mistake and it is one of the key reasons to blow up your trading account. Let’s say, you have identified the trend of the market. After the identification process, you have executed a long order in the USDHK pair. But all of a sudden, the FED cut their interest rates and the market changed its trend.
The professionals would have closed the long trade at that instant. But the amateur will stick to the losing trades with the great hope that the market will go in their favor. So learn to use protective stops so that traders are automatically closed after reaching a certain level.
2. Add position to the losing trades
Adding a position to the losing trades is a very big mistake. The successful traders in the Saxo Hong Kong community always suggest cutting the losing trades early. There is no reason to average down the loss by adding more lots to the trades. Instead of doing that, you should learn to find the best trade signals in other currency pairs. Accept the fact that the trade has gone against you. Once you develop the mental strength to deal with the losses, things will start to improve in your trading.
3. Trading with high risk
You should have a clear idea about your risk tolerance level. If you trade with high risk and exceed your risk tolerance level, it will be a tough task to manage the risk. Trading should be done in a relaxed environment. Without effectively placing the trades, it is really hard to survive in the retail trading industry. Stop thinking about the aggressive approach. Learn to deal with the trades with low risk so that you don’t have to blow up the trading account just by losing a few trades.
4. Ignoring the news
You should never ignore the news as a currency trader. News factors give you critical information regarding the direction of the price movement. Instead of dealing with the low impact news, learn to focus on the high impact news. Once you get better at analyzing the high impact news, use the news analysis to trade the major currency pairs. However, you might not feel comfortable with the market volatility during the news. If this is the case, wait for a stable market and execute the trade with confidence.
5. Trading without any confidence
You may be a skilled trader but if you trade without having strong confidence, you are going to lose money in most of the trades. Confidence will allow you to accept the losing trades in a very efficient way. Most importantly, it will teach you to deal with the ups and downs in the trading profession. So, work hard and develop your confidence level.