Trading aggressively is perhaps the biggest mistake most new traders make. If a short sequence of losses is required to lose all of your capital, then this suggests that each open position is too risky. A good way to correct your risk level is to adjust the size of your position to reflect the volatility of the currency pair you are trading. But remember that the more volatile you are, the smaller your position should be.
One reason why new traders are aggressive trading is because of their unrealistic expectations. They think that by doing aggressive trading they will make a lot of money fast, but just the opposite happens. On the contrary, however, the best traders continue to make consistent gains. Setting realistic goals and taking a conservative approach is the way to start Giga FX Trading.
Admit when you’re wrong
The golden rule of trading is to let profits grow and cut losses immediately. It is necessary to get out of a position when there is evidence that you have made a bad decision and you may lose even more money. It is a natural human tendency to try and turn a bad situation into a good situation, but in forex trading, it is a huge mistake. This is the reason – it is not possible to control the market.
Prepare for the worst (past performance is not indicative of future results)
We may not know the future of financial markets, but we have plenty of evidence from the past. What happened before may not happen again, but it shows that it is possible. For this reason, it is important to look at the history of a particular currency pair you are trading. Think about what kind of action might take place and how you can protect yourself against this bad scenario. Don’t overestimate the chances of the opposite happening – and have a plan for every situation.