Those who are trading the Forex market know the complex nature of this market. On the other hand, the rookie traders jump into the retail trading industry without having any precise knowledge. They rely on gut feelings and lose a big portion of their investment. Have a look at the professional traders in Singapore. All of them trade the market with managed risk and they never trade the market with emotions. They use one of the most powerful trading systems in the world. You might be wondering which trading strategy they follow. Its price action trading. Though the system is profitable, you should avoid some common mistakes to protect your trading capital.
Using indicators
You can’t find good trades by using the indicators. You might know the proper way to trade the price action confirmation signal but this doesn’t mean you will use the indicators. Indicators might work as a trade filter tools but still, you need to rely on multiple time frame analysis. Being a price action trader, it’s better to analyze the different time frame data since it will give you a better picture of this market. Stop thinking about low-quality trades. Find the best possible trade setups based on proper logic.
Avoid using the lower time frame
Though the price action trading system is extremely profitable, you still need to use the higher time frame. A lower time frame trading strategy is only for the aggressive trader and most of the aggressive traders loses money. Think smart and use the best trading platform to find quality trades. Daily time frame trading might seem a little boring but it is the only way to reduce the risk exposure. Trading is all about precision. You can’t secure your life using a lower time frame trading strategy. Use your intellect and you will eventually master the art of trading.
Ignoring the news
News factors are very powerful when it comes to Forex trading profession. The elite class traders at Saxo always analyze the high impact news so that they can scale their trade. Unlike the experienced traders, the rookie traders execute a trade based on technical data. Though the price action trading system is based on the Japanese candlestick pattern, you must learn fundamental analysis. Without analyzing the high impact news, it will be almost impossible to make a profit. Learning the news analysis is not all complex. Focus on the major news like interest rate changes and unemployment claims data and see how the market reacts to this news. If necessary, use the demo account to develop your trading skills.
Taking too much risk
You might know everything about price action trading strategy still you will lose trades. Being a fulltime trader, you must learn to embrace the losing trades. If you take a huge risk in each trade, it won’t take much time to blow up the trading account. You might win 90% of the time, but you still need to use money management. Always try to find high-risk reward ratio trade setups so that you can make a profit at any market condition. Never try to increase the risk exposure to earn more money. Follow a conservative trading technique to become a successful trader.
Develop your mentality
The novice traders don’t know the importance of mental stability. They start trading the real market after learning the price action trading strategy and eventually lose their investment. You have to train your mind to deal with the ups and downs associated with this business. You can’t make a profit all the time. Though the trading system generates high-quality trade setups, still you have to back-test your trading strategy regularly. The forex market is extremely volatile and it changes its nature without any prior notice. Unless you keep pace with the market change, it will be really hard to make some real progress.
