The Top 3 Awful Common Mistakes Forex Traders Make

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  • Post last modified:January 16, 2023
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3 Common Mistakes Forex Traders Make

When it comes to trading Forex every beginner would make lots of mistakes before becoming consistently profitable, these mistakes became evident to us after spending years mentoring other traders in the Forex market.

In this article, we bring you the top 3 common mistakes Forex Traders make before becoming successful. If you are interested in other mistakes Forex traders make in the Forex market, click here.

Common Mistakes Forex Traders Make

Common Mistakes Forex Traders Make

  • Wrong Lot sizes
  • No Stop Loss
  • Peer pressure

I will explain

Wrong Lot Sizes

This often happens due to the trader being anxious, instead of entering for example 1 lot size, he ended up using 10 lot size for the trade, increasing his risk by over 1000% in one single trade.

Another common mistake forex traders make is an order with no stop loss.

No Stop Loss

Most new traders would rather finish entering the trade before modifying it with their stop loss, this can be a deadline, especially in volatile market situations.

Peer Pressure

Another common mistake Forex traders make is depending on another person for trade ideas, which can be very deadly especially if that peer is an overconfident lad.

Depending on your peers for trade signals undermines your confidence, and lengthens your learning curve.

If you want to cover such common mistakes forex traders make? this video has more information to aid you;

3 common mistakes forex traders make

Rejection Strategy Vs Break Out Strategy

Every Forex Trading Strategy can be broken down into a Rejection strategy or a Breakout strategy, Our goal today is to examine the rejection strategy vs Breakout strategy in the Forex market, help you make informed decisions, and improve your Forex trading career.

Forex Trading is a zero-sum game, what you are losing, another trader is earning, and sometimes, that other trader is your broker, but that is a story for another day, you can read about manipulations By Forex Brokers here.

Break Out’s and Rejections are very common in the Forex market, despite this similarity in occurrence, Break out’s seem a lot more popular among retail Forex traders compared to rejections. Breakouts are so much common to that extent we have very popular strategies such as the London break out that is sorted and traded by most traders in the world.

In most situations, every trade that is lost by the rejection strategy is won by the Break out strategy, how then do you become profitable when a single decision to buy or sell could mean doom or glory? we gave a detailed explanation in this video.

However, here are a few things to note;

Rejection and breakout strategies are two commonly used approaches in forex trading. Both strategies involve identifying potential entry or exit points for a trade based on price action, but they differ in how they approach these points.

A rejection strategy involves identifying potential entry or exit points based on the rejection of a specific price level. This could be a resistance or support level, a moving average, or other technical indicators. When the price reaches the identified level and then rejects it, the trader can enter or exit the trade based on the direction of the rejection.

On the other hand, a breakout strategy involves identifying potential entry or exit points based on the breakout of a specific price level. This could be a resistance or support level, or a consolidation pattern on the chart. When the price breaks out of the identified level, the trader can enter or exit the trade based on the direction of the breakout.

Overall, the choice between a rejection and breakout strategy will depend on the trader’s individual preferences and risk tolerance. Some traders may prefer the more conservative approach of a rejection strategy, while others may be more comfortable with the potentially higher reward but also the higher risk of a breakout strategy.

Why does Your Forex Trading Strategy Fail After a While

Why does your Forex trading strategy fail after a while, This is a question that has baffled many new traders. In this article, we would find out why this is a common phenomenon and how you can use it to your advantage in the Forex market.

The journey of a Forex trader is not an easy one, you start off with zero knowledge of the market, and attempt your best possible to get a Forex trading strategy that works. You finally find one after hours of searching, and beaming with enthusiasm, and you begin to implement this strategy in the market.

It works perfectly for a while, and then disaster struck! No matter what you do? No matter your best efforts, the strategy that once made you money, has now proven unprofitable. Why does this happen to new Forex traders, and how can you take advantage of the situation to your benefit?

Why Does Your Forex Trading Strategy Fail After a While?

We have all been there, a Forex strategy that made you money last week is now performing abysmal, despite your best efforts. Why does your Forex strategy fail, despite giving it your all?

Types of Market Conditions

There is no foul-proof Forex trading strategy out there. Every strategy, one way or the other would have some down times. The difference between a successful trader and a struggling trader is primarily due to how they manage the risks during downtime.

If you have taken our free Forex trading course, we spoke about the two market conditions;

  • The trending market
  • The ranging market

Any strategy you come across would either work best in either of these market conditions, for this reason, a strategy that worked perfectly well last week may struggle to become profitable this week, should market conditions change.

Second, each market condition has its own unique way of trading it profitably, the problem is that it is often difficult for new trader’s to know or even be aware of which market condition they are currently operating in.

If you apply a range trading strategy in a trending forex market, chances are that you would blow your account and wonder if Forex trading is a scam.

How to Avoid Failure when the market conditions change

If you do not learn to trade Forex like a professional, you may keep wondering why your forex trading strategy fails after a while, you may keep jumping from strategy to strategy, committing forex trading strategy polygamy (pun intended).

Hopefully, you may pick a point or two here that you can use in your career as a trader to avoid these pitfalls.

  • There are 3 market sessions that run 24 hours in the Forex market, each market has its own characteristics. The Asian session, the London session, and the New York session all have unique trading characteristics.
  • Asian sessions are best known for their calm nature, and market consolidating, this gives room to trade your ranging strategy.
  • London session is often characterized by volatility, it is so common, there are specific strategies geared towards the breakout that happens during the London trading sessions, popularly called, London breakout.
  • London often trends, trading a ranging strategy in a London session is often not a good idea.
  • New York session set the general tone for the daily candle close, New York often trends.

Having identified all these, do you know what kind of strategy you are trading with? if not? worry not. Go back and review your trade history, and identify which market conditions gave you the most wins, and which resulted in losses.

If you made more losses during the Asia session, you are most likely using a trend-following strategy, otherwise, you are using a ranging strategy.

In this video, we speak in detail about why this very common phenomenon, why it happens, and how you can deal with it to become a successful Forex trader.

The Best, and Ugly Part of Forex Indicators in 2023

Forex Indicators are generally defined as tools used to forecast prices in the Forex market. Because Forex indicators bring the promise of simplifying or demystifying the complexity of the Forex market, most retail traders are urgently looking for the best Forex indicators to use.

Your job as a Forex Trader is to identify opportunities in the market and take advantage of them, Forex indicators promise to make that process easier, or even in some situations, they promise to take over the entire job.

This means that you can plug and play an indicator, and let it do its job while you focus on other things, while that sounds all good, the truth is that, retail Forex indicators are not nearly as good as their creators would want you to believe. Watch the video below to get more details about this.

The more you keep searching for the best forex indicators, the more time you waste, and the further away you get from your goals of becoming a successful Forex trader.

Why Forex Indicators Might Ruin You

The best forex indicators you might find as a retail trader are going to be losing you money in the long run for the following reasons:

  • They are not optimized for all market conditions
  • They take too many trades
  • They risk too much of your capital
  • The trading strategy of the indicator might not suit your individual style
  • They are most likely poorly coded strategies

The Best Forex Indicators

Think about it for a moment, the Forex market is a multi-trillion-dollar market, and getting even 0.00001% of that each year is a lot of money, if there is an indicator out there that can do that, it certainly not publicly available to retail forex traders.

There are no best Forex indicators, understand this, the earlier you do, the better, you can focus your energy on actually learning and becoming a better trader, other than relying on some indicators, signals, or robots.

There are no successful Forex traders out there searching for the best forex indicators, if you keep searching for that, you are just looking for a shortcut, that doesn’t exist.

What’s worse? You might just lose your time and money on fake indicators, which would further blow your account anyway.

Be informed

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