Some things need to think for new Forex traders (3)

Afraid to Take a Loss - Trading is not personal; its business. Dont think that a poor trade is a reflection on you. It could be you are just ahead of your time or a commercial order hits the market and temporarily creates a small unexpected move. Again, place your stop beforehand and NEVER increase your pre-determined risk. If its going bad, it will probably get worse; I think thats Einstein in motion stays in motion

Exiting Trades Poorly If you put on a trade and its not working make sure you exit properly; dont compound the damage. If youre in a winning trade dont talk yourself out of the position because youre bored or want to relieve stress; stress is a natural part of trading, get used to it.

Trading Too Short-term If youre profit target is less than 20 points, don't do the trade; the spread you pay to enter the trade makes the odds way against you when you go for these tiny profits.

Picking Tops and Bottoms - Looking for bargains works well at the supermarket but not trading foreign exchange; try to trade in the direction the price is going and your results will improve.
Being Too Smart  The most successful traders I know are high school graduates. They keep it simple and dont look beyond the obvious; their results are excellent.

Not Trading Around News Time Most of the big moves occur around news time. The volume is high and the moves are real; there is no better time to trade fundamentally or technically than when news is released; this is when the real money adjusts their positions and as a result the prices changes reflect serious currency flow (compared to quiet times when bank traders rule the market with their customer order flow).

Ignore Technical Conditions Determining whether the market is over-extended long or over-extended short is a key determinant of near-time price action. Spike moves often occur when the market is all one way.

Emotional Trading When you don't pre-plan your trades, it is essentially a thought and not an idea; thoughts are emotions and a very poor basis for doing trades. Do people generally say intelligent things when they are upset and emotional? I dont think so.

Lack of Confidence Confidence only comes from successful trading. If you lose money early in your trading career its very difficult to gain true confidence; the trick is don't go off half-cocked; learn the business before you trade.

Lack of Courage to Take a Loss There is nothing macho or gutsy about riding a loss, just stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Getting married to a bad position ruins lots of traders. The thing to remember is the market does crazy things often so dont get married to any one trade; its just a trade. One good trade will not make you a trading success; rather, it is the monthly and annual performance that defines a good trader.

Interpreting forex news incorrectly Fact is the press only has a very superficial understanding of the news they are reporting and tend to focus on one element and miss the point. Learn to read the source documents and understand it for real.

Lucky or Good Your account balance changes dont tell you the whole story about your trading; fact is, if you are taking a lot of risk and making money you will eventually crash and burn. Look at the individual trade details; focus on your big losses and losing streaks. Ask yourself this - if I had a couple of consecutive losing streaks or a couple of consecutive big losses, how would my account balance look. Generally, traders making money without big daily losses have the best chance of sustaining positive performance. The others are accidents waiting to happen.

Too Many Charity Trades When you make money on a well thought-out trade, dont give back half on a whim; invest your profits from good trades on the next good trade.

Courage Under Fire When a policeman breaks down the door to a drug dealers apartment, he is scared but he does it anyway. When a fireman climbs onto the roof of a burning building, he is scared but does it anyway - and gets the job done. Its the same with trading - its OK to be scared, but you have to pull the trigger; no trigger = no trades = no profits = no trader.

Quality Trading Time I suggest 3 hours a day of quality, focused trading time; thats about all your brain allows. When you are trading, you must be 100% focused - half way is plain bullshit and does not work. Dont even think that time spent in front of the computer watching the rates has any correlation with profitability; it doesnt. Spend less time but when you are trading, be 100% focused.

Rationalizing Killer. Absolute Killer. Put your trade on and let it run. If it hits your reasonable pre-determined stop, you're out. Moving your stop is like getting up after being crushed with a knockout blow; its pointless, things will only get worse. Dont ignore the obvious - you are wrong, so get out. Come back the next day and try again. A small loss will not hurt you, but a catastrophic loss will.

Mixing Apples and Oranges Have you ever done this: you see the EUR/USD trading higher, so you buy GBP/USD because it hasnt moved yet. That's a mistake. Most of the time the reason the GBP/USD hasnt moved yet is because its already overbought or some 4:30am UK news was bearish. Dont mix apples and oranges; if EUR/USD looks good, buy EUR/USD.

Avoiding the Hard Trades Bank FX traders have an axiom: the harder the trade is to do, the better the trade. This I learned from experience - when I needed to buy EUR/USD and it was hard to get them, thats when it is necessary to pay up and get the business done. When its easy to get them, then sit back and wait for better levels. So if you're trying to get into a trade or more importantly get out of a trade, dont putz around for a few points; get your business done.

Too Much Detail If you are trading more than 2 indicators, then you need to clean house. Having many indicators stifles trading and finds reasons not to trade. A setup and a trigger is all you need.

Giving Up Too Easy Your first trade of the day may not be your best but certainly its no reason to quit. I have a preset daily trading limit and I use it; you cant make money by making excuses. Getting trades wrong is natural and should be expected.

Jumping the Gun Dont be penny wise and dollar foolish; wait for your trade signal to be clear. Put on your trade and give it a decent size stop loss so that you dont get knocked out by random noise. Do trades and dont buy lottery tickets (extremely tight stops).

Over-Relying on Risk Reward There is zero advantage in risk reward; if you put a 20 point stop and a 60 point profit your chances are probably 3-1 that you will lose; actually with the spread its more like 4 to 1 (from entry point if it goes down 17 points you lose or up 63 you win; 17/63 is close to 4-1).