No matter how long you have been trading on the foreign exchange markets, you are bound to experience a number of lapses in discipline; whether they are brought on by emotional extremes or odd market developments.

Here are the most common mistakes traders make on the market. If you start noticing any of these errors in your own online currency trading, it is a good time to step back and refocus your energy on the basic trading rules.

Trading Without A Plan

Always resist the urge to trade spontaneously based entirely on your instincts without a precise risk management plan. If you have a strong point of view, go with it, but do your homework in advance so you have actionable plan that specifies where to enter the market and where to exit.

Running Losers and Cutting Winners

Some of the most common forex trading mistakes also include holding onto losing positions too long and taking profit on winning trades too soon. They key to avoiding losses is to stick to a trading plan that always has a stop-loss order. No one in the market can be right all the time, so the sooner you are able to accept small losses, the sooner you will be able to come up winning strategies.

Overleveraging

When you trade too large a position size relative to your available margin, even a minor market move against you can end up liquidating your position for insufficient margin. To cut down chances of this scenario, don’t base your position size on your maximum available position. Instead, base it on trade specific factors or your confidence in the forex trading signal.

Not Adapting To Changing Market Conditions

Remember to stay flexible with your approach by evaluating market conditions like ranges or trends. If you encounter a trending move, a range trading approach might not work and vice versa. Use your technical skills to highlight the market for range or trending conditions.

Trading Too Defensively

When you face a series of losses you might find yourself focusing more on avoiding them rather than highlighting winning trades. At such times, the best approach is to step back and analyze what went wrong. Refocus your energy until you start finding winning trades again.

Also remember that you aren’t going to retire based on a single trade. Keep your expectations realistic to avoid making bad trading decisions.

Are you still wondering how to become a trader? Learn to trade the market with in-depth courses and instructions from Capital Properties FX.