This article considers the common trading mistakes made by beginners in the forex Australia market.
If you are a beginner in the forex Australia trading market, you are probably experiencing massive bouts of frustration with the market. You know that you are trading as you have been told to, yet you are not making any progress in the profit section.
You should be aware that new traders often make common mistakes that they are not aware of. You should not blame yourself for these actions as many traders have gone through this when they first started this career.
Many individuals enter the forex Australia market thinking that it is a get rich quickly move. This is their first mistake. They start without risk management techniques and constantly raise their risk level because they think that riches are around the next trade. Risk management is one of the most important aspects of this market. It is advised that you not risk more than an average of 3% of your account trading balance on a single trade. This may well limit the amount of profits you can make, but it also limits the losses you could make.
Risk to Reward Ratio
You should review your forex strategy as that may be where your problem lies. Your strategy should allow you to make more profits than losses. It is important that it contains an exact risk to reward ratio. Many traders have an impeccable strategy, but their risk to reward ratio is limited, hence they do not show profits. To try and correct this problem, the strategy should let you leave your trades whilst they remain positive, but terminate your losses before they increase.
The Use of Leverage
The high leverage in the forex world is the reason so many individuals enter this market. Leverage makes it possible for you to make massive profits without the need for huge investment capital. You must remain aware at all times of the risks related to leverage. The leverage you use can make big profits, but you can also make losses that are as big.
Forex Australia Live
New forex traders are keen to get their hands dirty and start trading. This excitement and impatience often pushes them into the live market prematurely. This is extremely dangerous and you could be risking your total investment. You should not enter the live trading market until you have gained sufficient experience about how the market works and used your theoretical knowledge in a practical way. The answer to this problem is to open a couple of demo accounts. This will allow you to test your trading plans and strategies. You will be able to learn how the trading platform operates. Once you are showing consistent profits in your demo accounts, you can consider moving on to a mini or micro trading account.
Admit Your Mistakes
Everyone hates being told that they are wrong. Most people do not want to accept that their thinking pattern may be flawed. You should take time to review your trading strategy, check your trading methods and check that you are entering and exiting your trades at the correct points. An easy way to keep track of all this is to maintain a trading journal that lists everything you do when you trade. You should not only list the details about your winning trades, but the details about your losing trades as well.
These are a few of the common mistakes experienced by new forex traders. You should be aware of them and if you are suffering with any of them, rectify it.