If you are a newcomer to this market and you feel that you are doing your trades as you have been taught to, but simply cannot reach a level where you are profitable, you should take a step back and check if you are making some of the common mistakes made in this market. You should not let these mistakes get you down as taking a positive step to rectify your mistakes is a step in the right direction. Many beginners in the market find themselves in this boat.
Many new entrants into this market consider foreign exchange Melbourne as an easy way to become rich. It is not! To achieve this get rich quick notion they have, they tend to increase their level of risk in the hope that they will make a fast profit. Risk management is an important aspect of forex trading. Experienced, professional traders advise that you should not trade more than 2% of your trading account balance on a single trade. This may limit your profit level, but it also limits your losses.
Risk to Reward Ratios
Your trading strategy may be the reason why you are not making profits. Many traders implement a strategy that results in bad trades more often than in profitable trades. This does not mean you should dump your strategy because you may have a suitable strategy that is not making sufficient profits. The reason for the lack of profitability could be due to your risk to reward ratio. To overcome this problem, you should have a ratio that allows the winning trades to continue and cut your losses as quickly as possible.
You Are Never Wrong
If you believe you are never wrong, you will soon find out that you are when you lose money. It is a part of human nature to not want to admit when you are wrong. To remedy this problem you have to go over the data you use and determine if you are using it correctly. If you find that there is an error along the way, correct it, test it and take it from there.
Entering Live Trading
This is one of the biggest mistakes newcomers to this financial market make. It is inadvisable to go straight into live trading if you do not have sufficient experience and knowledge in the market. You need to test your strategy and your trading plan before you commence trading with your own money. The best way to do this is to open a demo account and test your trading methods before you start trading in a live account.
Foreign Exchange Melbourne Leverage
Another problem for failure in this market is using too much leverage. Leverage is the reason why so many people enter this market, but you should be aware of the impact it can have on your account. You need to be fully aware of the result if your trade turns against you and you have used high levels of leverage in the hope of making a substantial profit. Leverage makes your profits bigger, but it also makes your losses as big.
You need to do thorough research before you enter trades. Simply entering a trade because it seems like a good idea can only end in losses.