Common mistakes made when investing in the Forex Market

By jtelo May 28, 2009 23:51
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Common mistakes made when investing in the Forex Market

cashLearn how to make an investment in Forex is not enough to succeed. Just knowing how to invest and which are the most common currencies of investment, as the U.S. Dollar, Euro, etc. are just the basics of investing. Knowing when to invest and what to invest in are two of the most essentials things to success in FX trading. But, why people that knows all these stuff still lose money? Here are some of the most common errors people make when trading in the Forex Market:

Know nothing about the market in which people is investing

Anyone who wants to invest in Forex should know that the market is influenced by external factors such as political movements, speculation, interest rates, economic policies like increasing exports of a significant product, news global influence on the value of a currency, and so on. All these are essential facts of reality that influence the price of a currency. Along with this, it is extremely important to learn about the stories of behavior of the currencies and the factors that influence them.

Many people face the market without knowing anything about its past and behavior, just having in mind the basics of trading getting stalled on just numbers and trends. Believe Forex Market goes beyond that line.

Risking too much on the transactions

The desire of wanting to achieve very high profits in operations leads many of the investors to risk more than they should. Be careful with the capital being negotiated, because greed can lead to run out of anything. Once more diversified operations is most advisable to avoid risking all at once.

Not taking risks at all

Contrary to the previous mistake, not taking risks at all is also a huge mistake made by many investors. Invest carefully is probably the safest choice to make, but this could also lead to nothing. Taking calculated risks is the best way to operate in this market, and by calculated I mean: follow trends, do some math, read about the market in question, and know always where the risk taken can lead if everything goes wrong.

Not taking into account the possibilities

It must be realized that in this market if someone buys, someone else is selling what he just bought. Who sells is because he think prices will go down and who buys is because he is convinced they will rise. Not only the gain that can be obtained at each operation must be taken into account but also the loss.

Lack of knowledge and experience

Most of the time people enter to this market, like I said before, knowing nothing but the basics. This is definitely NOT enough. There’s a lot of research that needs to be done: read articles published by experienced investors, books, etc. It is also a great help to follow an experienced investor’s journey, there are many of them who create blogs about their journey in this market; but most  important of all, find someone to advice you and keep in mind that great traders aren’t created from one day to another.

Copying strategies

A big mistake is to copy the strategies of someone with much experience. Why? Yes, it’s true that if they have so much experience they should be incredibly successful, but it is also true that their strategies are unique and probably impossible to completely copy, and trying to do so will lead to nothing since it has to be taken into account each person goals, objectives and the capital in negotiation.

Not having a Forex Trading System (Forex Robot)

Forex Trading Systems have become extremely popular among traders, this robots can be used in two different ways: the first one is to use them as primary income makers, which could also be a mistake if the investor trusts the software too much. And the second way is to have the robot to compare thoughts, create more ideas on how to move in the market, use it as trend and numbers analyser and also use it to trade when you can’t. This is the best way to use a Forex trading software, people get all the benefits, filtering all the flaws.

Investing in Forex is an art, and like all arts it needs patience, knowledge of the instruments, commitment, study, learn and do business with a right attitude. It is a really tricky market and just knowing how to trade won’t do it. There’s plenty of things to learn and you have to have it in mind, like I said before, great traders aren’t created from one day to another, there’s a lot of hard work, wins and losses in the way. And speaking of wins, here are some tools for you to avoid making the mistakes other people make and start winning:

By jtelo May 28, 2009 23:51
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