11 Mistakes Forex Traders Make
When we start trading (or, in fact, doing anything new), we all make mistakes. It’s part of the journey, and that’s how we learn. But what if you could learn from other traders’ mistakes? Here, we have compiled the top 11 mistakes we see beginners make – not just on Harborx app, but in currency trading in general.
1. Closing trades too early.
What every trader wants? To win, right? So you may be tempted to close the trade once you see it make even the tiniest profit. It makes every sense as you secure your earning, even if it’s small. But could you have made more money if you held the position longer? Sometimes it pays to exercise your patience and think twice before closing the trade if it’s going your way. Want to secure your earnings? Explore putting the trailing stop loss.
2. Holding onto the losing trades.
This may be the side effect of the previous mistake. We want to close winning trades to secure the profit, but what if the trade is losing? Many traders keep it open, hoping that the situation will change, which it certainly may. But it can also be the case that while you’re waiting, your trade goes into an even bigger negative. Sometimes the best thing you can do is cut your losses by closing your losing trades, learn your lessons and start fresh.
3. Not Putting Stop Loss.
Speaking of losses, too many traders never put Stop Loss on their trades. Psychologically, it makes sense: we don’t like thinking about what happens if things go wrong. But if they do, Stop Loss helps you protect your account balance, and this is something every trader should keep in mind.
4. Ignoring the margin call.
When your Trading Power goes below 33%, you will receive a notification (you can read more about Trading Power here). If your trading power does not increase, some of your losing trades will be closed automatically. To avoid that, we recommend that you always check your trading power before opening a new trade, and keep your account balance high enough to avoid getting stopped out. Here’s our recent article about leverage and margin.
5. Opening very few trades.
As we just said, it’s important not to open too many trades to keep your Trading Power in check. But then again, beginners sometimes tend to open just one trade instead of experimenting with different currency pairs, trade duration and strategies. And if the only trade you have opened goes negative, it’s hard to not feel disappointed, right? This is just something to keep in mind while developing your trading plan as well as fighting for your place on the Leaderboard.
6. Overhedging losing positions.
There is another trick to increase your Trading Power without making a deposit. It is called ‘hedging’. If your Trading Power is getting low, but you don’t want to close any trades, you can open trades that are opposite to what you already have. For example, if you have a BUY EURUSD trade open already, opening a SELL EURUSD trade will increase your trading power (you can think of it as ‘cancelling out’ open trades). There is a drawback, however. You are likely to end up with two opposite trades: one winning and another one losing. While having a winning trade is always great, you will be stuck with the losing one, too.
7. Never-ever looking at charts.
We understand: forex charts may be intimidating, and most beginners prefer to steer clear from them. However, there is a good reason Harborx app still has simplified charts. When you tap on a currency pair, you can see how it performs on different timeframes. You can check how high or low the currency had recently gone, and this is how you can estimate your Stop Loss and Take Profit amounts. Furthermore, it always helps to know that it’s a good idea to BUY when the currency pair is rising and to SELL when it’s going down. Charts give you a visual representation of the trends, hinting when they are likely to change.
8. Not following global news.
We talk about this a lot: currency markets react to global events. Looking at the Economic Calendar is also a good idea! Otherwise you may be risking to miss high-volatility events, such as elections, political crises, important announcements and so on. Having an app with news alerts on your phone is a great idea.
9. Keeping positions open over turbulent weekends.
Markets close late on Friday night and open early Monday morning. But what happens in-between? Whatever goes down over the weekend can affect the prices on Monday, and it’s not uncommon for markets to open with a ‘gap’ (price so different compared to Friday’s price that there’s literally a gap on the chart). If you leave your trades open for the weekend, it presents an opportunity of either winning or losing (or hitting your Stop Loss – great if you have it!). In addition to being charted swap fees, you are risking to wreck your equity. So unless you want to gamble on election results or something like that, closing your trades on Friday night is a good idea.
10. Believing in a one-fits-all-cases approach.
With time, every trader develops their own strategy and trading style. However, it does not mean that you will develop an approach to stick with at all times. Markets can be unpredictable, and that’s part of the fun, but it also means that you may need to stay flexible and act differently. For example, you may be used to holding your trades longer, but there may be a day when getting out of the trade early is the best decision you can make. Staying flexible and open to learning new things is the best you can do, and, eventually, this approach will positively reflect in your account balance. But if you were looking for the one and only correct approach, it does not exist.
11. Not having fun.
Currency trading is serious, but it does not mean you can’t have fun. We try to make Harborx app is fun as possible with the Leaderboard competition, the option of inviting friends, surprise missions and promo codes. Harborx was created by experienced traders who spent years in high-level careers learning their most important lesson: trading is better with a smile. Harborx lets you experiment, have fun and develop your own trading style. Celebrate it when you win, smile and let it go when you lose. Basically, relax ✌🏻
Which mistakes have you noticed yourself make? Have we missed any? Comment to tell us what you think.
Harborx Limited is regulated by Cyprus Securities and Exchange Commission under license number 230/14 in accordance with the Markets in Financial Instruments Directive of the European Union, and the Investment Services and Activities and Regulated Markets Law of Cyprus (Law 144 (1) / 2007). Harborx.com is owned and operated by Harborx Limited.
There is a high level of risk involved with trading forex, commodities, indices and other contract-for-differences. Past performance is not a reliable indicator of future results. You must be aware of the risks associated with trading directly or indirectly on margin.
Please ensure that you fully understand the risks involved and do not invest with money you cannot afford to lose. Please seek independent advice if the risks involved seem unclear to you and refer to our full risk disclaimer.
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