Over the last couple of years we have noticed that many people are eager to benefit from the Forex market but don’t know exactly how or where to begin. Currency trading isn’t as hard as most people think and with a bit of practice, you can enjoy market trends, and benefit from small market fluctuations. To help you with your few steps, we would like to share with you a list of mistakes that are common to new traders.

Remember, the key to becoming a trader is discipline and following a set of rules

1. Use leverage* correctly - Leverage is an excellent tool when used correctly. On one hand it can increase potential returns on trades, allowing you to benefit from currency trends. On the other hand it can also increase the value of your potential losses. Using the correct leverage is essential when trading Forex.

One must remember that iFOREX guarantees negative balance protection, meaning that you can never lose more than you invest.

* The use of various financial instruments, such as margin, to increase potential profits on investments.

Example: Accounts with a leverage of 200:1 allows you to trade 200 times your account size.

2. Lack of a trading plan - Traders can quickly lose their confidence if their trades are not successful. Their large floating profit made, may often turn into a loss. Trading using a plan can help, especially if you are new to the market.

3. Incorrect money management - Trading Forex efficiently is a question of correct portfolio management. Proper money management means that you aware of every aspect of your trade and are willing to risk on each trade.

4. Forgetting to use a stop-loss when trading - Traders often wipe out their accounts due to “wishful thinking”- hoping that their trade is going to head back in the correct direction. Using stop-losses prevents traders from taking hard hits, by providing a safety net, automatically exiting the trade. Traders using correct risk/reward ratio, including stop-losses, can increase the potential of efficiently managing a Forex portfolio.

Forex Trader’s Common Mistakes

5. Accepting loosing trades - Many traders lose confidence after a couple of losing trades which reduces their ability to become an efficient trader. The currency market requires a gradual learning curve that demands persistence, trial, and mistakes to enhance your trading abilities. Learn from your mistakes and conquer the market step by step.

6. Capital preservation - Correct portfolio management is a key factor to maintaining your account. Once you understand the market and start to trade successfully, it is important to preserve your capital while looking for new market opportunities.

7. Limiting profits and holding onto losses - This is very common among new traders, and normally occurs due to the lack of a trading plan. After one or two losing trades, traders often find themselves taking small profits even though the trade could have been a potential huge profit maker. Using correct portfolio management can help a new Forex trader.

8. Becoming greedy - When traders have an open trade that is making them profit they often forget their predetermined target for the trade, as they are sure that the trade will yield more profits. Remember that the markets are dynamic and trends can always change.

9. Over confidence - If you are experiencing a winning streak, remember that the market is full of winners and losers. Note, all traders experience loosing trades and not all of your future trades might be successful.

10. Plan your trade before you open the position - When your trade is open you will often experience emotions like greed, forcing you to change your pre-determined target or stop-loss. Trading according to your original plan will help you with your portfolio management.

By following a few simple rules, you too can benefit from the currency market.

Good luck trading!

The risk of losses involved in the transaction or speculations in the foreign currency market or other financial markets can be considerable. Trading in currencies or commodities isn't suitable for every investor based on the fact that the currencies, markets or commodities are likely to fluctuate according to the market conditions Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. Speculate only with funds that you can afford to lose. For more information please refer to our Risk Disclosure.

The high degree of leverage that is obtainable in the trading of off-exchange FX transactions can work both against you as well as for you. Leverage can lead to gains as well as losses

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