Not checking other time frames to accurately predict the market
For beginners in Forex trading, the most commonly used time frames are 5, 10 or 15 minutes, because profits and losses can be realised more quickly and it is an immediate fulfillment. They do not take into account the secondary trends on the daily or weekly charts. However, you need to analyse multiple time frames in order to avoid the market moving against you.
You should have a good understanding of the trends so as not to succumb to this downfall.
Unpredictability
The exchange rates on the Forex market are considered to be unpredictable, and they may change due to unexpected (economic or political) events.
Trading on margin without fully understanding what it means
It is important to fully understand the concept of trading on margin. You have to accept losses that exceed the margin amounts paid, this being one of the things poorly explained to clients.
Not using a stop loss point for every trade
If you are using high leverage, it is advisable to set a stop loss point for your trade. Even if you believe that the market will go in a certain direction, it does not necessarily mean it will. The market can rapidly turn in the opposite direction, which may result in your account being stopped out. The stop loss is set for this purpose to help mitigate some of the losses.
Not placing the stop loss point in the right position
It is important to know where to place your stop loss point. This is where your leverage comes into play. If you cannot afford to place the stop loss in the 25+ pips range, you just have to reduce the amount of leverage you are using.
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Not having a plan to win
A plan to win is a must-have for each trader. Putting your plan into action and still being able to get all of the pieces to fit can be difficult. For example, you may know that the US Dollar will drop, but exactly like you, there are millions of people out there just waiting to purchase the American currency. As a result, you may find yourself on the losing end of the trade, because the price will still go up. By making a contingency plan, you can avoid most of the dangers in FX trading.
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