So You Think You Can Trade?

Well, well, well. So you think you can trade? This article is all about challenging ourselves. Are we truly as capable as we think we are at trading in the forex market? With the increasing number of FX trading platforms, accessibility has never been easier. It has led to the disproportionate influx of budding retail traders participating in forex trading. This in turn begs the question, can we truly trade like a pro just by watching YouTube tutorials or reading the ton of textbooks out there?

There are many common mistakes forex traders make, even if they have had years of experience. You might want to check if you make these mistakes too! Here are some right off the bat:

Not having note-taking practices

Many novice traders do not trade with a plan. It’s not that easy making a trade. It involves more than just looking at a chart and making a decision based solely on what the chart tells you there and then. Professional traders usually keep a record of the market movements that pique their interests, as well as the previous trades they have done or may have forgone so that they can reflect on their own decision-making process.

Overly focusing on technical analysis

Many traders also overly focus on purely technical analysis, blatantly disregarding economic data and news events. That’s treading on thin ice as huge news could easily cause market movement to sway and diverge from any historical trends, even the most unyielding ones.

Taking profit too quickly

An essential principle of forex day trading is to minimise losses and maximise profits. While some new traders tend to hold on to losing positions too long in the hopes of a turnaround (this is also another blunder!), many also end up diminishing returns by taking profits way too early! It might not sound like a big issue, but in the long run, this practice is not ideal. Consistently doing this will seriously sap your earning potential! In this sense, a seemingly safe trader does not necessarily imply a good trader.

That being said, being a good trader is no easy feat. In fact, the list of common mistakes far exceeds the mere three that are being mentioned here. Now, do you still think you can trade?