Gold forex trading is not a foolproof venture, and you need to be methodical in order to have success. Some missteps or losses are inevitable, but there are also many mistakes that can be avoided if you are aware of these common errors and take precautions to avoid them. Here are three common gold forex trading mistakes, and handy solutions to avoid them:
Trading without Enough Start-up Capital
It is possible to enter the market and start trading with very little investment – even under $100. However, trading with a small amount of start-up capital puts you at risk for several things. For one, you may not meet the minimum lot size, or you may not be able to handle the minimum risk associated with that the market swings. In no time, you’ll have to increase your capital or bow out. Additionally, you are more likely to be emotionally invested when each little uptick or downturn affects such a large percentage of your capital. The solution is to start off with a larger capital amount.
Not Having a Risk Management Plan
You can reap incredible profits with gold forex trading, but you also need to be prepared for the flip side of that. Markets can be erratic, and you need to be aware of the risks and manage them in a conscious and responsible way. If you don’t have a good risk management plan, your entire account could be cleared overnight. Making a profit is a worthy goal, but protecting your capital comes above everything. The solid is to include limit orders on both sides. Stop losses orders will automatically pull you out before losses amass too high, and take profit orders will pull you out once you’ve reached a targeted profit level.
Trading with Emotion
We are humans, and therefore it is extremely difficult – but not impossible – to separate ourselves from our emotions in any endeavour. Whether the emotion is excitement or anger, greed or frustration, emotions can ruin your trading if you’re not careful. Whether you feel overconfident and stay in way longer than you should, or feel uncertain and pull out way too early leaving big profits on the table, emotions can be very dangerous. The solution is to adopt a strategy and stick with it. Of course trust your instincts, but never let yourself be guided by emotion when it comes to trading.
These solutions can help guide you away from the common trading mistakes, and toward a prosperous future as a gold forex trader.
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