4 Basic Traps You Want To Avoid When Trading Forex

It still amazes me that many newbie’s to forex and some old hats find it difficult to consistently make money from forex. There are 4 basic traps you want to avoid when trading forex and I know from personal experience almost all newbies to forex do this.

1. Under funding your account: Do not open a forex account until you are able to fund it with a minimum of £5,000 or $8,000. If you want to practice then you can open a mini-account but don’t expect to make any money with anything less.

2. Trade management or money management: Some of the best money managers in the world struggle to make a 15 % return on their equity every year so who are you to bulk the trend? Don’t risk what you don’t have and use this simple rule when trading – For every £2,000 of equity trade with 1 mini lot or 10,000 lots or CFD’s. This has got nothing to do with how much money you are actually going to risk just how much money to put on the table when you trade.

3. Have a plan: Yes it does sound incredibly simple but how many of you have a routine when trading? I mean do the same thing day in day out finding those trades? Or do you just jump from one strategy to another depending on the trade? Stick to a simple strategy and it will pay dividends some of the time. Losses are part and parcel of a trader’s life.

4. Be confident: Enter and exit your trades were you plan to and make use of all the trading tools available to you for example stop-losses and trailing stops. If you panic before trades then don’t trade. Simple. You are not the alpha or omega you will make losses but because you have a plan (see point 3) you are able to exit your trades at the right points.
Trading is a lonely business but you don’t have to trade alone. There are forums and trading rooms that you can go to talk everything trading and a lot more. If you are looking for something a bit light hearted then check out the Big Bruv Chronicles blog. He talks mainly about Geppy (GBP/JPY) in his daily Geppy Chronicles column.

Remember Forex trading has large potential rewards, but also large potential risks. You are not alone.

By: Greg Michaels

Article Directory: http://www.articledashboard.com

G. Michaels is an expert reviewer of easy methods to make and save money online. Currently, searching for top forex blogs: www.delorencefx.blogspot.com