Forex trading is all about making money. Like all other investments, you need to be careful during the trade. The same is the case with forex day trading. If you decide to indulge in trade for just a part of your day, it does not mean that you can make mistakes due to hasty or irrational decisions.
In such an intense and highly liquid financial market, day trading is actually a high leverage system. There are certain mistakes associated with day trading that you must avoid in order to be a successful trader.
5 major avoidable mistakes for successful day trading
Averaging down is the most devastating mistake that the traders unintentionally make to ramp up profits and returns but it results in totally opposite outcomes. Here the major issue is that it results in loss of both money and time as the losing position remains on hold. Then in case of loss, traders try to compensate for the loss with larger trade. Loss of a huge amount on a single trade not only affects the capital of the trader, but it also demoralizes the trader as well.
News and Pre-positioning
You cannot predict the reaction of the market at certain news announcement about a country or countries. Thus, taking and setting a position in Forex trade before any certain announcement can have a serious effect on trade. Planning is good but positioning should not be done beforehand.
Trade immediately after News
In case of any significant news, you should not make hasty decisions. You should wait till volatility subsides to judge the current condition of the market.
Greater risk, a greater return
This practice of believing in ‘greater risk-taking heaps greater return’ does not work in forex day trading. A safe technique is that you should not risk more than 1% of your capital in a single trade. The purpose of this technique is that the single trade would not be able to affect the account of the trader.
Expectations in day trading
In the case of day trading, your unrealistic expectations can drag you toward losses. You should accept whatever the forex offers on that particular day. Too much greed, desires, or expectations can make you take those measures that you do not adopt in normal conditions. Thus control your emotions, be relax, and have realistic expectations with forex trade.