Forex has earned its popularity because of its continuous service to the traders. Before the invention of this platform, trading online using the currency pairs was beyond the imagination of common people. Thousands of investors are joining this growing currency market daily, and 95% of them are dropping out because of some unacceptable flaws.
This situation is really pathetic as they could rise like a phoenix if they showed the least amount of diligence to their trading business. Today, we will discuss the most crucial flaws in FX trading, which can be mended with a little bit of hard work.
List of the flaws:
There is a saying that states that a rolling stone does not gather moss. It can work as the whole truth in the Forex platform too. An over-excited person cannot shine in life as he changes his mind frequently due to his emotional state. In trading, if investors buy financial instruments based on emotion, it will not take much time to end their career. To get the best from our skill in this platform, you must try to control your emotions.
After attaining a calm mind, an investor must plan his trading journey. Without a map, one cannot conquer Everest as so many ice peats are hidden all throughout the road. Though making a profit on FX is not like conquering the Himalayas, but one must have an action plan beforehand. Because it can work as a blueprint to survive even in the bad trend and save us from the inevitable loss. Always remember, Forex is not the right place for the people who want to secure success quickly. If you want to establish yourself as a professional trader, you must be ready to work hard and push your limit to the next stage.
A plan must be written with pen and paper so that we can easily decide which actions should be taken in which situations. Amateurs are ignorant of the significance of a trading plan and trade based on luck, which brings huge loss in the end. To reach their goal in FX, they must build an effective plan and stick to that.
3. Risk management
Beginners buy financial instruments without any prior research about the risk. The market is so volatile, and major changes have a strong effect on the currencies. Without researching the market, if newbies execute trades, they can face unexpected losses. Rookies should invest enough time in the fundamental and technical analysis so that they can be prepared for the bearish market in advance.
Risk management helps greatly to predict the market. According to experts, an investor should be conscious of the risk he is dealing with. To calculate the risk, we may estimate 1:3, where a $1 risk can be taken if our investment is $3.
4. Stop loss
Setting up a stop loss-order helps to stop loss after a certain period. If you do not set a stop loss point, our trade will not be closed until our account balance gets zero. New investors do not bother about setting up a stop-loss order, which accelerates their doom and ends their trading career.
This can work as a double-edged sword for investors if you do not use it strategically. Newbies should keep in mind that they take a leverage option from their broker as a loan. Taking a high risk can increase the amount of loss you face. The investor must take the risk that he can tolerate; otherwise, he may have to return the leverage money from his personal account.
Therefore, FX traders must be conscious of the flaws which may affect their trading business. Finding the flaws will really help you to conquer most problems that arise.