There are a number of acts that traders complete on the forex rates market that they should actually be avoiding. These acts are generally done with good intentions, but they rarely lead to anything good. You should consider what these acts are, what they can do to your forex rates trading and how you can avoid them. Once you know all of this you will be able to avoid these negative behavious and be more successful in your trading.
Not Using the Correct Forex Rates News
When you trade with forex news you have to use the right news releases. There are hundreds of news releases each day and most of them will not relate to the currency pair that you are trading. They will also not relate to the strategy that you are using. There are three levels of forex news based on the impact they have on the market. Certain trading strategies will need to use certain levels of impact. For longer strategies you need higher impact because of the long-term effects you are looking for.
The mistake that trades make is to act on forex news that is not right for their strategy. This could be a short-term trader acting on news that relates to long-term trading. When you do this you are not going to make the profits that you should and you could actually make a loss. To avoid this you need to know what news you have to look for to complete your trading.
Diversifying Your Trading
Many traders assume that once they have experience on the forex market they are meant to diversify their trading. This could be through the trading of more currency pairs or through the use of different trading strategies. This is something that you do not actually have to do on the market. If you are making the profits that you need from the way that you are currently trading then you do not have to worry about diversification.
Diversifying your trading when you don’t need to will only lead to problems with your trading. If you increase the currency pairs you trade then you have to increase the amount of analysis that you need to do. This is something that will cause you to miss trading opportunities and you could fall into analysis overload. To avoid this you simply need to understand that not all traders need to diversify their trading.
Trading without Testing
An act that a lot of traders complete which is very bad is to trade without testing. This means that they have not used the demo account to test the method they are using to trade. When you are faced with this you will lose money on the market because you are not aware of the limitations and potential weaknesses of the strategy you are using.
To avoid this you simply need to use the demo account before you trade. If you make any changes to the way that you trade you should test the strategy on the demo account before you trade live.