5 common mistakes forex traders in UAE make and how to avoid them
Table of contents
- Five Common Mistakes that Forex Traders commit in the trading market
1. Not having a trading Plan.
2. Not enough research.
3. Ignoring economic data and other global events.
4. Trading without a net.
5. Trading from Scratch.
Forex is one of the most popular investment options now available to individuals, particularly in the UAE. UAE has been structuring its ground to transform into a global business ground for the past few years and is now encouraging stock investments, especially in the currencies, which means the forex.
Forex investments are indeed a lucrative opportunity for investment, but if not played right, they can actually expose the investor to far more losses than they can actually bear.
A good understanding of the forex market is necessary to make sure that the investor doesn’t let himself make bad decisions when investing in the forex markets.
In this blog, we are trying to shed more light on the common mistakes forex traders make and how to steer clear of them.
2. Five Common Mistakes that Forex Traders commit in the trading market
1. Not having a trading Plan
A trading plan is a must, irrespective of the kind of security you are investing in. A forex trader without a defined strategy will be making a grave mistake and can eventually end up with a lot more losses than expected. So before deciding on trading investments in the forex market, it is important to make sure to ask yourself the following questions:
- When to start trading?
- What kind of criteria need to be discussed beforehand which will help evaluate the trading strategy?
- What kind of currency pairs are you planning to trade in?
- What are the expected losses that you can survive?
- When to exit a trade?
These questions can give you the clarity you need on how to go about your trade and when to stop it. This will help you to know your strategies every now and then and change them if they aren’t giving you the expected returns.
2. Not enough research
Making sure that you have done your homework regarding the market factors that can affect the currency pairs and how to tackle them if they go overboard is all part of the trading plan, which will effectively help you not make losses.
The foreign exchange market is a mix of different elements, and there are multiple factors that can affect its sustainability; therefore, the forex trader needs to know about these factors to make effective investment decisions.
Most forex investors move to invest in forex with the intention of making immediate profits, and they forget to research well before making the investment decision. This can lead to more losses. The people who have made good profits are the ones who have developed successful trading strategies after an effective research.
The research has to be closely done in areas like economics, market fundamentals, and money management.
3. Ignoring economic data and other global events
Budgets and global economic events have a huge significance in determining the forex market. Most of these events happen at regular events and this is a positive factor so that a forex trader can easily track these events. Even though exact forecast is not possible, a fair outlay can be derived if there is a close track on the events.
4. Trading without a Net
The forex market cannot be watched by you for 24 hours a day, 365 days a year. This calls for you to set an action plan, which can help you design a strategy to stop and limit orders at predetermined prices. When such a strategy is planned, it will help you hold the fort even if you are not present and also prevent you from making impulsive last-minute decisions that can go positively or negatively. Contingent order placements will not affect your strategies.
5. Trading from Scratch
When people discuss the high-profit turnouts from investing in the forex market, others who don’t have an idea think it’s straight easy to hole up money through forex investments. In reality, this is not the case. There have been instances where forex traders without a trading plan invested every bit of their savings and faced losses in a significant way. So, the first step to avoiding such a crisis is to have an understanding of the market and get yourself a demo account where you can learn to trade forex without actually investing any money. The strategy helps you get into the loop and helps you choose what is best for you.
Trading in forex can be a profitable opportunity to make some good money or even get an early retirement. But, if not played right, it can actually cost you all the money you have been saving up. Getting the help of a trading platform like Seven Capitals can easily help you and guide you to make the right investment decisions.