Top Ten Things a Forex Trader should Avoid

In the last decade, a huge number of consumers entered the forex market. With the ability to trade forex online, many people have been exposed to major risks they don’t quite understand. Here are the top ten things you should avoid if you are just entering the forex market.

1. Avoid brokerages or funds you can’t be confident in
The forex market has plenty of scams to offer. The regulatory body responsible for monitoring forex investment in the U.S. estimated that from 2001 to 2007, consumers lost $460 million to forex frauds. If you don’t have confidence in a brokerage as established and legitimate, why give them your money?

2. Don’t have unrealistic expectations
Too many traders think that they can make easy money in a short amount of time. Nothing good happens without hard work and time. Forex trading is just another type of work, so don’t expect to make money without working hard.

3. Don’t overestimate your knowledge or skill
Beginning traders often enter the market with more confidence than skill. There’s nothing wrong with being a beginner or a learner—just don’t assume that you’ve become advanced overnight. This is the fastest way to stop learning, and also the fastest way to lose a lot of money.

4. Don’t lose your focus
Traders can become spooked and start rushing from one thing to another. They may start trading in a wide range of currency pairs or use several trading strategies at once. It is best to specialize in a handful of currencies and know them extremely well.

5. Don’t abandon your trading system
Of course, this starts with having a trading system in the first place. For example, take a look at the pivot point forex trading system. The advantage of establishing a philosophy and system is that it keeps you disciplined. This is also why it is too easy to abandon the system. When you have a series of bad trades, you may scramble, looking for something else. Having a good system and sticking with it will control your emotions and save you big mistakes in the long term.

6. Don’t take on too much leverage
One of the advantages of forex trading is the fact that you can control your risk and returns. Leverage allows you to magnify returns almost as much as you want. But too many beginning traders fall into the trap of using massive leverage and they lose everything in a few bad trades. Stay away from high leverage until you have lots of experience.

7. Don’t experiment with exotic currencies until you’ve mastered the basics
It is easy to think that the better returns are right around the corner with a developing currency, but these are generally quite risky and volatile. Practice with the established currencies first.

8. Don’t go it alone
You can try to learn forex trading yourself, but that probably means lots of lessons learned the hard way. Invest in a good forex education course.

9. Don’t try to keep up with the imaginary successful trader
Many people imagine that someone out there is making huge amounts of money with very little time and effort. That person doesn’t exist. Do what you need to do and don’t try to compete. If you made a reasonable amount of money for the time you spent, you were successful.

10. Don’t give up!
Trading is an art and a skill that you will learn with time. Stick with it, work hard, and expect some disappointments. As you gain experience you’ll start seeing the returns you’re hoping for.