This article is based on my personal experiences. It is a reminder for me to avoid mistakes and a lesson for many of the traders in this forum (Specially the Newbies)
Me and my cousin started forex in the year 2008 when the crude oil fell to 36.00$ price level. I bought the crude oil at 37.59$with stop loss 35.50$. And at that time i didnt know the levels, didnt know the technical analysis. And most importantly and unfortunately i didnt had the strategy on which i could rely on. Someone told me that it is the lowest price so its a good time to buy. I entered the trade and closed at you know what price????????????????????????????????? It was 37.80....... gave me only 21 pips.....
There was no valid technical and fundamental reason behind the exit of that trade .
That is one of the most bitter experiences i ever have in forex market.
I always ask myself now ???? what if i would have known the levels at that time????? Wasn't it better to wait and close the position somewhere around 40 or 42 or 45 or 50 or 70.
Factors Of The Mistake:
Now I realize the reasons behind that bigger mistake.
Knowledge Is Power:
This is the thing that puts us in the situation to take a position (Long or short). There should be a good valid reason to enter a trade. If Tony asks me where are the keys of his house. I cant tell him because i don't know .... but if someone asks me where are the keys of my house i can easily tell him,,,,these are in my pocket as i know this.
So knowledge of the subject is the key to success. Some basics studies on which we must have hands on experience are as follows.
We should learn all the time. We have tons of material on Internet. Practice these on practice account first as practice makes a man perfect.
To learn the forex is much easier than to implement these studies. Right way of implementation if studies, Right choice,Right decision, Right time of entry is the perfection. Therefore, i say practice these on practice accounts.
Too Much Screen Watching Is A Killer:
Humans have emotions. If i would have been a robot and a forex professional trader software was installed into my head then my win percentage may become 99.9%. When a professional trader takes a position, he completes the studies, makes a forecast and strategy, decides the profit and stop loss levels on technical basis. After entering into trade,,,,,he follows the trade but not too much....until the close of his or her position.
Because he knows there is a valid reason behind the Entry, Stop loss and Target.
Too much screen watching kills my friends. So we should avoid too much of screen watching as it boils our emotions.
Greed Is A Curse:
We want more, we want more,we want more.....in the end one dies. People are not satisfied from what they have. Similarly traders want more. Its a suggestion only that set multiple targets in your mind but end you trades on the first or 2nd target according to the environment of the market.
Haste Makes Waste:
Relax....Take your time.... solid decisions, Solid response,,,,soft decision soft response...and wrong decision leads to wrong response. Don't make haste in taking the positions.
Every trader must has the losing trades even the top trader in the world. No need to be disappointed. Don't trade if you don't know the forex market very well. Never trade forex if it is like a stranger to you. Never trade if you don't have 75% of chances of profit taking. Because it is our money. We don't want to lose it. Money makes money, No money makes No money, Simple is that.
Wish you good luck in future.