For many Forex traders, the hopes that they once had of making millions overnight have long gone, and now their biggest wish is to be able to stop losing money and turn their trading accounts around.
Forex traders make a number of different mistakes which all contribute to getting into this situation, and if you’ve found yourself with a trading account that is losing much more money than it is making, you’ll be glad to know that there are certain things which you can do – and not do – in order to restore it to a profitable state.
Choose and perfect a trading method
In most cases, traders who come to Forex are looking to make a lot of money quickly. In order to achieve this, they begin to chase the ‘Holy Grail’ of trades which will make them all of their desired riches. However, instead of looking for a method which is able to produce gradual successful results, they search for an indicator which they believe can do all of the work for them. But, if this was possible, we would all be rich!
For those who are serious about making money in the Forex markets, getting rid of this mentality and moving towards a method which can be used in the long term is essential. Price action trading is one such tried and tested method, and involves learning to read the raw price on a chart and focusing on price patterns which are high-probability and repeat themselves. It is a very simple method, which many traders are able to practice and perfect with little help. The best thing to do as a trader is pick a method which suits your trading style, commit to it, and practice it until perfected.
Trading on higher time frames
Many traders have the misconception that the lower the time-frame chart, the more chance there is of them making trades and money. Whilst there is some truth in the fact that traders will get more signals on a lower-time-frame chart, it’s also true that the lower a time frame is, the more false signals there are, making it more difficult to make money. By taking this point alone on, traders can begin to turn their trading accounts around. Higher-time-frame charts are where the majority of trading should be done, especially for beginner traders. Because when compared to the lower time frames, a lot more time goes into making the daily chart signals, they are usually much more powerful and reliable, increasing a trader’s chance of making money.
Trade with money you can afford to lose
When it comes to the Forex market, sacred money is lost money. Traders who trade with money that they cannot afford to lose may as well just throw it away. The reason behind this is that when a trader is fearful about losing their money, emotions will start to run high and bad decisions will be made. Due to this, the only money which you should ever risk in the Forex markets is money which you can afford to lose. This is an important rule which will help you keep a clear and objective mind when trading.
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