Forex Day Trading: 5 mistakes to avoid

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Forex day trading 5 mistakes to avoid

• Presented by The Forex Secret

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Averaging Down on Forex Trades

• Traders often stumble across the practice
  of averaging down.
• It is rarely intended, but many traders have
  ended up doing it.
• There are several problems with averaging down
  in forex markets.
• The main problem is that a losing position is
  being held not only potentially sacrificing
  money, but also time.
• Thus, this time and money could be placed in a
  better position.

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Pre-Positioning Forex Trades for News

• Traders know the news events that will move the
  market, yet the direction is not known in
  advance.
• Therefore, a trader may even be fairly confident
  that a news announcement, for instance that the
  Federal Reserve will or will not raise interest
  rates, will impact markets.
• Even then, traders cannot predict how the market
  will react to this expected news.

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Forex Trades After News Hits

• Similarly, a news headline can hit the markets at
  any time causing aggressive movements.
• While it seems like easy money to be reactionary
  and grab some pips, if this is done in an
  untested way and without a solid trading plan, it
  can be just as devastating as trading before the
  news comes out.

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Risking More Than 1 of Capital on Forex Trades

• The practice of taking on excessive risk does not
  equal excessive returns.
• Almost all traders who risk large amounts of
  capital on single trades will eventually lose in
  the long run.
• A common rule is that a trader should risk (in
  terms of the difference between entry and stop
  price) no more than 1 of capital on any single
  trade.
• Professional traders will often risk far less
  than 1 of capital.

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Unrealistic Expectations in Forex Trading

• Much can be said of unrealistic expectations,
  which come from many sources, but often result in
  all of the above problems.
• Our own trading expectations are often imposed
  on the market, yet we cannot expect it to act
  according our desires.
• Put simply, the market doesn't care about
  individual desires and traders must accept that
  the market can be choppy, volatile and trending
  all in short-, medium- and long-term cycles.

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