Forex trading, according to some, is difficult to understand. While for those that have really understood it, this is one of the most profitable forms of trading. But if you are considering day trading this is one of the trading forms that comes with the least number of hurdles.
Online trading platforms like CarbonFX allow traders to easily get the taste of online trading. These platforms have always been debated about. There are several scams as well. But there are few like Carbon FX that have really given traders some good profits.
If you choose forex for your day trading here are some of the most common mistakes that you should stay away from:
Not choosing the right stop loss rule
No matter how many forex trades you perform per day make sure that you have a stop loss order for each of them. With experience you would be able to take better decisions. But there are cases when your prediction might go wrong and you would have to quit from the losing trade. Analyze the progress of the stock to find the ideal position of the stop loss parameter. If your stock reaches this then it would be time to stop there in order to avoid losses.
Not looking at the win rate
When you perform forex trading you should not start the process without looking at the win rate. This would be an indication of the probability of winning in that trade. Higher the win rate, better the chances of making profits. Another parameter that people look at along with the win rate is the reward/risk ratio. This number should ideally be more than 1.25 to ensure that your rewards would outweigh the risks involved in the trade. Anything that comes with the reward/risk ratio to be very low is a trade that you should stay away from.
Not giving the right gap from news
When you are trading it is a known fact that news events have a major role to play in influencing the stocks. They might cause the stocks to move in any of the directions. By simply knowing what the news event is all about you would not be able to make a precise prediction. The volatility still remains attached with the trading. And often, soon after the news you might notice a spike or a drop. But give it some time for the stock prices to settle down in one direction.