JoshAn investor must trade consciously to avoid all kinds of mistakes. Every year, a great number of investors are joining the trading industry due to the higher profit margin. Some of them has become a millionaire, but most of them failed badly. This happened as they are not careful about the basic ideologies of trading. Today, we will discuss some common mistakes which must be taken care of to get the best from this FX platform.
Demo account
A demo account should be utilized as a test lab to check the action plan before implementing those on the real account. A demo account has all the advantages of the real account but the only difference we find here that the currencies are fake. That means you do not have to take responsibility for the loss and profit in the demo account.
Stop-loss point
An investor must set a stop loss point to save his account from a sudden bearish market. Forex is a highly volatile market, and no one can say what can happen when. A stop-loss point helps to find out the best trading experience by closing the trades automatically. But try to use the best CFD broker in Singapore or else you might face slippage during the automated trade closing. Avoid trading the market with low-end brokers as it will the technical analysis process complex.
Beginners are very reluctant to set a stop loss point and fail to minimize their loss to a great extent. Generally, when a stop loss point is set, the trades get closed when the trend touches the specific point. A newbie must be cautious about setting this technical option to prevent the sudden hit from the downtrend.
Take profit
Because of greed, most people fail to set a take profit order, which would help them to close the trades automatically when it would reach a certain profit goal. Newbies are generally ignorant of the take profit point set up, which makes them vulnerable to market changes. It helps an investor not to stay in a place all the time by taking the support of the automation.
Risk management
An investor must manage the risk to reward ratio before buying financial instruments. According to experts, an ideal risk to reward ratio is 1:3, which means a trader should not take a risk of more than $1 if their investment is $3.
Rookies are very careless about gauging the risk before buying the financial instruments. They think if the investment is made, a great amount of profit can be earnt. A beginner should not be reluctant to do the necessary research to predict the future.
Leverage
Newbies take on a huge amount of leverage, which makes them suffer by increasing the risk. Leverage can work as a two-edged sword, which indicates that it can do either good or bad if actions are not taken carefully. An investor must keep in mind that they take the money from the broker as a loan. They have to repay the money whether they make a profit or loss. Taking leverage will cut the money from the real account later when an investor faces loss. Sometimes it is found that in this way, the account balance becomes zero, which forces an investor to close the account later.
Broker
Choosing the wrong broker may destroy the FX career of a newbie. Before choosing one, an investor must check the necessary certification of the broker so that they can find the perfect broker to execute trades with.
At the bottom line, it can be said that a trader must be careful about the possible pitfalls in the FX market so that they can reach their profit goals. Experts become very vigilant at all times and for that reason, the rate of loss be minimized in their trades.