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Note for a beginner! TOP 10 mistakes of traders in the Forex market

Do you have extra funds or have you wanted to try yourself in trading for a long time? Do you want to invest in something worthwhile rather than spend it on entertainment? Try forex trading! On the financial exchange, you can earn significant amounts in just a few days. But don't let the prospect of mountains of money turn your head. But what is forex trading? How to make money on it and is it worth trying? You will find answers to these and other questions in this article!

Forex trading: where to start?

Forex trading is, first of all, trading. Although it is often called a "game", it is by no means gambling in the spirit of a casino. Trading is primarily a business. People invest in order to increase them. In simple words, forex is currency trading. There are two types of trading on these exchanges:

  • Arbitrage trading is a game on the exchange rate and their difference according to the speculative principle “Buy cheaper, sell higher”;
  • Short-term deals on the difference in time zones are concluded according to the principle of short-selling and bring significant profit, but require knowledge of who to transfer money to. 

Today, all activity in the forex markets is online trading. The times when deals still needed to be concluded in one particular room are long gone. Now all transactions and investments are carried out online, this allows you to significantly speed up the process of both accepting transactions and transferring funds. Acceleration affected all elements of the trade, so, on each platform there is an information board that displays any changes with the items of trade. But there are also programs that quickly find relevant transactions and simplify the calculation of the prospects and risk of deposits. On some exchanges, their use is prohibited by the rules of the platform.

Forex cryptocurrency trading

You can find more details about forex trading, its history and trading specifics in the article on our website! But in addition to real currency, cryptocurrency is sometimes presented on Forex exchanges. Often, it is traded on an arbitration basis, but there are differences, we will consider them further!

What is the specificity of cryptocurrency trading on Forex?

The first and main feature of cryptocurrency trading is the decentralization of token and altcoin trading. Despite the fact that some coins have their own platform (for example, Binance coin), many of them are traded on other exchanges. Trading platforms come in a variety of sizes. Basically, their size is determined by the principle of trading. It is divided into:

  • Intra-bank — cryptocurrency trading takes place within one platform on an arbitration basis. Due to the attachment to a single site, the prices of certain assets depend not so much on external factors as on the investment and return of traders' deposits. 
  • Cross-exchange — provides for the possibility of money transactions and transfers of tokens (and other units) between multiple platforms. The sites conclude contracts and form their own network. There is a kind of amalgamation of courses (albeit with differences). 

Special attention should be paid to inter-exchange arbitration. As mentioned above, the system exists on the basis of a common network, but a newbie in the field of trading may have a question "Why such a fixed trade is needed?" In simple words, for the sake of profit from commissions. For a trader, such a “common” network is an opportunity to “play” on the difference in the rate of cryptocurrencies. Due to the instability of the asset, the cost of coins on two exchanges united in one network may differ. Read about the methods of trading, working with finance and the essence of cryptocurrency in simple words in the article.

forex trader

But if it seems to you that you are now sufficiently knowledgeable and ready to start playing on the stock exchange, then wait. Let's take a look at the main mistakes of forex traders!

10 mistakes of a beginner forex trader

10th place

Not using Stop Loss and Take Profit. 

Trading is inherently risky. There is always a chance to lose money (no matter how scanty it would be). In order not to go into the red after closing a not particularly profitable deal, there are Stop Loss and Take Profit instruments. Their task is to save part of the amount in the event of a transaction failure. 

Let's consider the tool in more detail. Stop loss is a command that will allow, in the event of a fall in the value of assets to a certain level, to close a deal and withdraw funds. What is it for? The fact is that trading today is an extremely dynamic process. The broker is simply not able to follow the rate every second. The market situation can change at any moment and an open deal will only bring new losses every minute. Stop-loss will allow avoiding this. Take profit, in turn, will allow you to withdraw the amount as close to the growth peak as possible.

Unfortunately, beginners often either do not know about the Stop Loss command or simply do not understand why it is needed. But a sharp loss of funds often leads to the fact that a trader leaves the profession. 

9th place

An attempt to be constantly present in the market.

Beginners tend to be hyperactive, as soon as they close one deal, they immediately open another. This is often done according to the principle “Faster! Now I’ll skip everything! ”, Naturally, he does not have time to analyze the market, does not pay attention to forecasts, or simply does something to do it. Naturally, such actions are rarely successful. 

Beginners need to learn to "control themselves". Catching a trend and being on the crest of a wave is either a rare piece of luck, or the result of a competent miscalculation. Better to spend time analyzing market trends, to understand what is appropriate to do now, is it worth selling assets or is it appropriate to pull them up? It is important to make informed decisions and not try to be everywhere! Logic and consistency will be enough to start trading.

8th place

Hope for a trend reversal.

A sharp rise in quotations is followed by a fall and equalization of prices close to the previous level. The process of a decline in value is a trend reversal. By trading on it, you can really quickly earn large sums. But the problem is that the trend reversal does not occur as often as newcomers want, as a result, they spend money for a frankly hopeless goal. 

These attempts are caused by a misunderstanding of the mechanics of the market. The growth is driven by supply and demand. If assets are bought up, then the price will rise and against this background it is simply stupid to try to sell in the hope of a reversal. Therefore, it is recommended for beginners to follow trends rather than looking for a pivot point. 

Calculating the moment when prices start to fall is not as easy as it might seem at first glance. Therefore, trading against the trend is often the lot of experienced and skillful traders. 

7th place

Reluctance to learn.

How often do you pay attention to the instructions for gadgets? How much attention do you devote to training videos? If not a lot, and it seems to you that in trading you can act with manuals in the same way as with instructions, you are seriously mistaken. 

Many beginners neglect learning forex trading and find themselves in an unfamiliar environment. Often it seems to them that it is enough to go through the basics in a couple of minutes and gain profit several times with a demo account for success. Is it worth saying that after that their money disappears, and the desire to participate in the auction disappears further?

For a beginner, without proper preparation, it is difficult to understand not only the intricacies, but even the basic elements of trading. For successful trading, we recommend paying attention to paid trading courses. Today, successful brokers conduct courses for future traders and teach not only theory, but also practice. 

6th place

Intraday trading.

Forex exchange is an opportunity to make money quickly. People go to the platform for this very purpose and sometimes achieve it. But this can be done in several ways. Newbies often want to earn a lot and quickly. To do this, they enclose "shorts" (from short-selling). 

But short trades are much more difficult than long ones. They require quick and accurate calculations. With which beginners usually have problems, since they often do not have enough experience and preparation for successful trading. 

5th place

Leverage is used too often.

On courses, forex brokers offer to use the so-called "leverage". This is help from the bank, which in case of a successful transaction will significantly increase profits. But if you are unlucky, there is a high chance of losing your entire deposit. 

There is also a specificity of "issuing" leverage. If the broker does not take risks and the chance of an unsuccessful transaction tends to zero, then banks can simply refuse to conclude an agreement. And the whole point is in the sense of leverage — it is issued in the hope of a trader's mistake. Therefore, it is advisable to first get experience in trading and understand when to contact banks and when not.

4th place

Unambiguous position regarding profitable deals.

Newbie traders usually have one thing in their heads: “Benefit”. It seems to them that they are able to conclude extremely profitable deals. Unfortunately, the reality is different. Too many factors affect the success of a deal; sometimes it is simply impossible to calculate everything and predict the result. 

But sometimes newcomers stubbornly, like mantras, repeat the same actions with the hope of improvement. Instead of stopping and analyzing the events around them, paying attention to their mistakes, they begin to conclude new agreements. As a result, beginners sprinkle ashes on their heads and often go to a significant disadvantage. After that, most traders quit their profession. 

For successful trading on the stock exchange, you need to immediately understand that it is always impossible to go into a plus. Falls occur from time to time, an experienced broker tries to “cover” losses as quickly as possible by concluding new contracts. But he does it not according to the principle “Faster, faster!”, But deliberately and judiciously. In simple terms, beginners need to come to terms with falls and setbacks. A real broker, like a fighter, must get up after a knockout.

3rd place

Emotionality 

Feelings are inherent in man. We love, we fear, we admire. It is a shame for us to lose (no matter what) and it is pleasant for us to receive. But unfortunately, a person does not always manage to keep his emotions in check. This is especially noticeable in people whose work is directly related to intellectual work and "hassle". You yourself could meet people who are nervous and aggressive, remember their reactions to the slightest setbacks or minor stimuli. Can their actions be called balanced and rational? It seems to us — not very much. Inappropriate behavior and, therefore, unreasonable decisions are especially characteristic of novice traders. 

Probably everyone has watched films (or seen at least one) about men in expensive suits and white collars. Often the brokers in them are eccentric, arrogant people with an explosive character and a lack of a sense of proportion. They are often credited with amazing talents, quick wit, and simply demonic insight. They achieve success with laughter and a cheeky smile, half the length of the film goes to antics, violations of all possible laws and lewdness. Is it worth talking about the invalidity of what is shown? 

Unfortunately, beginners try to inherit eccentric prototypes, behave as outrageous as possible, and simply lose control over their emotions. This is already enough to lose attention, it is banal to be distracted. It is enough to drop the value of units by a couple of divisions, and the broker starts a fit of rage. He is ready to immediately conclude a new deal, just so as not to lose profit. But emotionality does not allow analyzing the environment, market situation and trends.Emotion-based trades are usually doomed to fail. 

For beginners, it is advisable to just be patient and treat everything carefully and with miscalculation. Even in The Art of War there was a phrase “Don't trust your feelings, they will pass, but the decisions will remain”. Trading in general and trading on the stock exchange in particular are complex matters and require endurance, strong nerves and calmness, you should not rush, it is better to analyze everything several times and make the right decision. 

2nd place

Making deals with a high chance of failure.

"He who does not take risks does not drink champagne!" — it is with this motto that newcomers come to the exchange. They find incredibly lucrative deals, close deals, and wait for results. "Beginners are lucky!" they think. But days go by, and there is still no result. The acquired assets have reached a plateau at best and there are no upward trends, and they are hardly possible. All that remains is to wait or withdraw money. And if you are unlucky, then the price drops sharply and the broker is at a huge loss. 

“The game is worth the candle,” beginners like to say. By buying risky assets, they are already planning what they will do with the huge revenue. But beginners forget about simple logic. To take risks, you need to have reserves, in simple words, "do not put all your eggs in one basket." The risk is appropriate when it can be taken. Of course, you always want to earn large sums, but they are definitely not worth everything. It is better to steadily go into a small plus than to hope for a victory. 

Luck is statistical error. You should not rely on luck, it is better to trust calculations and logic. The risk, with rare exceptions, is not justified. Trading, like any business, is an extremely risky business; you should not increase the chances of "going out of business" to 100%. Remember the rule "Think first, do later", huge profits come next to failure, is it worth it? The question is open.

1st place

Lack of a trading plan. 

Financial activity without precise formulation of tasks and goals is a failure. The trader is obliged to think over, calculate the number of transactions made per month. He needs to set a goal for himself and think over ways to achieve it. Trading in assets requires an orderly approach; you cannot deal with finances in a chaotic manner. Unfortunately, beginners often overlook the need to draw up a trading plan, which makes their activities chaotic. They begin to enter into deals not deliberately and make the above mistakes. A well-written plan with adequate goals will help protect yourself from failure.

If someone thinks that trading on the stock exchange is to grab the most profitable offer and keep it, then he is deeply mistaken. Without a plan and careful analysis, it is simply impossible to work. We recommend that a beginner contact professional traders (preferably teachers), with their help you can objectively assess your own capabilities and set priorities. 

If you plan to start trading on the stock exchange, we recommend that you contact the teachers and get basic knowledge and skills, newcomers often lack them.

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