When you trade the forex exchange rate you could have very good intentions. However, the problem with good intentions is that they do not always lead to good results. There are many times when good foreign exchange rate intentions lead to bad outcomes. It is important that you know the most common bad outcomes that could come from good intentions.
Not Having Variety in the Foreign Exchange Rate
The decision to stay with one currency pair is something that most new traders are told to make. While this does help you get started in the forex market you have to know that it does limit your options. When you fail to diversity your currency pair trading options you limit the amount you can trade and the profits you will make. Of course, this does not mean that you should be trading as many different currency pairs as possible.
It is recommended that you have at least two pairs that you are trading. The pairs do not have to be completely different as having a common currency in both pairs is good. When you have a common currency you can use the news and insight you gain for one pair with the other. However, the pairs will move in different ways which allows you to trade more and potentially make more profits.
Being Too Quick to Expand
A lot of traders want to make profits as quickly as possible, but this is not something you can do on the forex market. You need to take your time to learn how to trade and how to identify what the market is doing. If you are unable to understand the forex exchange you will not be able to make money on it. The decision to expand your trading venture too quickly will lead to losses. You should only expand the number of currency pairs you trade and move to trading live when you are confident in your strategy and can prove that it works.
Leaving the Tried Methods Behind
There are some traders who feel that they can move away from the tried and true methods of trading. This decision could be made because they once found a different indicator. However, this often leads to bad trades because the trader does not know enough about the market. Finding a new indicator may only work once, but you may never see this indicator again.
There are a lot of methods that you can choose from when you trade on the forex market. There are multiple strategies available for every timeframe and length of trade. You should consider all of these options before you even consider moving away from tried and true methods.
Only Using One Analysis Method
There are two ways to analyse the forex market, but many traders decide to use only one. Technical traders state that the market takes the fundamentals into account and they do not have to look at them. While the market does move with the news it is important that you know when the news is coming. It is recommended that you incorporate both analysis types into your strategy to varying degrees.