97 Top Forex Mistakes

“Forex: Trading is not easy like everyone thinks, first comes the studying and learning, then discipline, and on top of all of that is the pressure that traders must face at times.”
-A wise trader in my trading rooms.

Hello my Friends and Traders! This is the complete forex mistake blog post. I have been working hard on this post compiling and working to make it very helpful to the traders for a long time to come. I want to thank my friends on twitter and from my trading room in helping me compile the list. Since this list is going to help many traders I am going to ask that you please ReTweet this list and also share it on Facebook with the buttons on the top left. This is a guide I want to put in the hands of traders to help them be armed with ideals that will help traders forever.

Please leave a comment on which one is your favorite mistake 🙂 or at least the one that you have done the most. Also if I missed some please let me know and I will add it to the list when I update this post.

I am going to elaborate on each one of these Forex trading mistakes so there is no confusion.

1.Putting in too much money and not having any trading experience—Many traders will put a lot of money into the market with no real trading experience. Learning to trade is highly developed skill and if you jump into it with little experience it is like dressing up to play in an NFL football game and jumping in when you have never played before. You will get killed!

2.No Training Experience—Trading is a skill that must be learned. You need to read and study to get it. It is best to learn in person while you are sitting with a seasoned trader. That is my opinion and it certainly was the case for me. I am not saying you have to pay for training because there is certainly a lot of great education on the internet for free. Either way there is a price to be paid in your learning curve. It takes time, effort, and practice to learn.

3.False expectations—Believing you will make a million dollars with no experience.
You must prove yourself and learn to make money in trading. You can make a million dollars but it is just like starting your own business from scratch it is going to take some time.

4. Stop loss too tight—(dying the death of a thousand cuts.) Price action in trading is whippy, meaning the price moves up and down very fast. Even if you have a good trade and your stop is too tight your win percentage can decrease dramatically. However this can be adjusted depending on you who you are and your strategy

5.Taking Large Stop Loss—Just as too small a stop loss is going to hurt, so is too large of a stop loss. Choose one that is right for that trade and then adjust risk.

6.Not having profit targets—If you don’t know where you are going how are you going to get there. If you don’t have profit targets then the trade can turn quickly and you can see a winning trade reverse into a losing trade.

7.Over Trading—Taking too many trades will gives you less time to think about what you are doing and increases your chances of making a mistake.

8.Opening too many positions at once—If you have too many open positions it can cause you to have too much size on for your account and can lead to disaster. Also if you are adding to different trades at the same time many of those pairs are correlated which means if one trade go against you all of them could go against you.

9.Not having a good understanding about margin rules and requirements—Over leverage is the #1 killer of forex traders. When you go too far you get a margin call. Therefore get educated about margin calls and adjust accordingly.

10.Not having a trading plan—I truly cannot understand why traders just jump into trading without having a plan. If you don’t have a plan, you’re planning to fail.

11.Not setting goals—In each plan you should have trading goals, maybe to start the goal will be to following your plan. Or perhaps a profit goal, one point keeps it within reach. Small steps lead to success. Baby steps are important we must learn to crawl before we can walk. If you make your goal to large and it is not reasonable to reach then that can create discouragement.

12.Not understanding money management—Money management means using the proper amount of risk for your trades and is very important in long term success. Having a money management strategy needs to be incorporated into your trading plan.

13.Not having a defined strategy—Inside of each trading plan is the component of a strategy or several strategies. A strategy is a step by step instruction on what guides you on how to enter your trades. This is just like your plan and will change all the time but you need to have one so you can monitor your performance and see what is working and what isn’t.

14.Not following your plan—What good is a trading plan that you don’t follow? Follow your plan so you can see what is working and what isn’t

15.Entering impulse trades just to be in the market—You don’t have to have a trade on all the time. Be patient and wait for the setup.

16.Following gurus blindly—This one has killed many traders. I have heard many traders that have loaded up on a trade because a so called guru will say this pair is going to this level. Learn a system and don’t be a follower.

17.Listening to everyone/ Too much info—In today’s social media communication world, sometimes there is information overload. Find a few trusted friends and filter out the rest. However make sure they are trusted don’t listen to someone that has no track record.

18.Listening to no one—You alone are responsible for your trades and you alone must make trading decisions. However we all need to be challenged and sharpened by others. Some make the argument that in trading you must be alone but that is not true. I put myself around the best because I want to learn from the best and I want to be the best. Listening to no one and being isolated won’t help much.

19.Not Understanding pip cost—Each pair has a different value some traders don’t know which pairs have which value and that has an impact on your money management.

20.Using the wrong broker—This is a huge mistake traders make getting started. Some brokers are just scam artists. Don’t believe broker review sites either because they usually are associated with the broker or get a commission. My best advice is to ask a trusted friend about their broker.

21.Not knowing how to use your trading platform—This is another one that many traders make and it costs them money. Take some time and practice with the platform before you trade live. Read the manual and test it well. Then start with a small account and build trust in the platform and experience using it.

22.Not understanding the difference between ask and bid pricing—You buy and sell at a different price the area in-between is called the spread and that is the amount that goes to the broker for executing the transaction.

23.Thinking you can just follow someone’s trades and be profitable—The reason this won’t work is because timing is everything in trading. Even if the person you are following is making money then you still have to time it perfectly to do well. This takes experience and practice. Sorry, there is just nothing that is going to get you out of experience and practice.

24.Letting trades run against you —The longer a trend runs the more power it gains, thinking “it has to come back” has been many a traders infamous last words. Don’t let it run so far away it drives your account to zero.

25.Going for the big one! ( putting all your money in one trade) –This is gambling, don’t do it.

26.Emotion Based Decisions—Getting emotionally led we all have emotions because its money on the line but we can’t let our emotions make our decisions. This applies to trading and real life, usually when our emotions are running things then we make bad choices.

27.Not being financially ready to trade—If you do not have the money to trade then do not trade, it is as simple as that. Trading with money you need to pay bills or live off of is disaster especially if you do not have a long proven track record of successful trading.

28.Putting too much pressure on yourself—Trading is a high pressure task by itself, when you have to make the trade for the money then the pressure gets much greater. Usually you will find yourself making mistakes. Relax and follow your plan.

29.Not having a clear understanding of Technical analysis—Market Fundamentals do drive markets but if you are trading based on fundamental analysis, you still need to have a good handle on technical analysis. I have said it before timing is important in trading and technical analysis can help you spot the best entries.

30.Trading the News not being properly prepared—News trading is a favorite trade for many traders but this additional trading skill takes time to learn. If it was easy everyone would do it. Do your research and practice before risking large amounts, even better talk to someone that is really good at it?

31.Relying too much on indicators—Indicators are lagging and get you to the party late. I am not saying do not use them because every trader is different. I personally do not use them but you need to understand price action even if you use indicators. You can also combine them with price action as well. Just don’t rely completely on indicators. Indicators also mess up your charts I prefer clean charts so I can see.

32.Confusing hard to understand trading systems—Trading is hard enough to learn as it is. Do not make it impossible to learn by using a complex system that would hard even for the most accomplished traders. Do yourself a favor and keep it simple.

33.Believing that having more money means you will be more successful—Yes, you can make more money if you have more in your account. However you can also lose more as well. The key is to be consistent no matter how much money you start with and learning the right trade size for your specific strategy. Then as you have proven to be successful then you can add more money in your account once you have established that track record.

34.Not having the right attitude—Trading is a mind game, You have to be on top of your game to be a professional. If you don’t believe in your strategy you will not make it. If you can’t shake off the losses then maybe trading is not right for you. Try something less stressful like knitting.

35.Leverage too high—This is a trader killer. If you use too much margin then you will probably blow out your account. Do your homework and find out how much to risk on each trade.

36.Not putting the work into Your Trading—Learning to trade professionally is hard work and there must be a major commitment into learning the skill of trading. Unless you are 100% dedicated to trading, you might as well hang it up. I am not being mean here, I am trying to help you from making a mistake. If you are not committed it is not even worth your time.

37.Falling for Forex Scams—I hate to mention this because honestly people should not be so foolish…. But they are. If it sounds too good to be true it is. If they say you will make millions, they lie, if they say it is easy run the other way. If they say, no time required then they are trying to steal your money. Don’t be a victim; instead live in the land of reality.

38.Not doing a personal examination of yourself to determine trading style—I can never tell anyone to trade like me, Why? Because everyone is different and we all have different abilities and preferences. We are all wired differently what works for me might not work for you. Don’t try to be Joe trader try to be yourself and find out what your own strengths and weaknesses are.

39.Over Confidence—Stay humble or the market will humble you. As soon as you start getting over confident you will begin to make mistakes.

40.No confidence—If you believe you can or you can’t you is right. Even if things go bad you can’t allow yourself to lose confidence as soon as you do stop trading until you get it back.

41.Not Trading at the Right Times—If there is no volume the market won’t go anywhere and you get stuck holding a bad trade. Trade during peak trading times when the markets are open. Also when the market is in consolidation period, it often does not pay to trade.

42.Not having good charts-– Charts are the tool of the trader. Get good ones that are clear and easy to read. Also charts that enable you to customize them any way you want is very helpful.

43.Picking Tops and bottoms—This is a difficult task because once a trend starts nobody knows when it ends. The key to picking tops and bottoms is to wait for signs of a reversal before attempting to get in. Let momentum be your guide.

44.Revenge Trading—Trying to make back your money in one trade, this is unwise and usually leads to further losses.

45.No Patience—It pays to wait for the setup, do not anticipate the trade because that is predicting instead wait for the trade to develop and enter when you get your signal. Patience can also affect your exits as well. So learn it.

46.Cutting Winners Too Quickly— The Forex Market is a trending market and that is a good thing if you learn to ride the trend. The only problem is that while a trending market it is also wild and whippy. If you don’t give your trades room they can whip you out and then continue with the trend.

47.Letting Greed Control You. – Greed can cause you to make bad decisions. Make sure you fight this by following your plan.

48.Not understanding the spread—This can impact traders because if they do not understand that there is a different price in which you buy a currency and sell a currency. The area this has the greatest area of impact is on stop losses and Limit Orders.

49.Trading with Fear—If you trade afraid, you will lose. Keep your fear in check by maintaining a positive attitude and also by keeping your risk under control.

50.Over analyzing the trade— Stay within your system if the charts give you a signal then take don’t try to analyze everything it will drive you crazy.

51.Not understanding Market Fundamentals—Having a good understanding of fundamental information is important in your growth as a trader. Trading fundamental data is difficult to do unless you are trading with very long term perspective with large targets and large stops. Fundamental data can change quickly and change the technical setups in an instant.

52.Opening different trades with the same base pair—Example: AUD/USD and USD/CHF. The reason this is a mistake is because if you are short dollar in both pairs and the dollar is strong then you will lose in both trades thus doubling your risk. It is important to study correlations if are planning to open multiple pairs at the same time.

53.Insisting that you were right—We all want to be right, but if you must be right all the time in trading you will be broke. The market is right and we must follow the market. Our real profit comes from developing money management strategies that increase gains.

54.Not recognizing the impact of global events and how they impact the currency markets—Events that alter a nation also alter its currency. Be aware that big global events will effect currency prices.

55.Following a big move (Chasing Trades)—When the market moves and is crashing and you don’t want to miss out and then you decide to jump in. This is a mistake that takes out many traders. Because usually as soon as the trader jumps in the move is over and it reverses going the other way. A couple of things to remember that will help avoid this.
There will always be another trade don’t worry about missing one.
Know where support and resistance is at. Usually when it is exploding it is right near one of those stalling points.
Be patient and wait for your setups, Trading is a waiting game.

56.Shorting the lows and buying the highs—Remember the old saying by low and sell high? This is very true. Successful traders wait for pullbacks and retracements before entering trades. You will go broke real fast if don’t figure this out.

57.Not Understanding Margin requirements—Margin can be an account killer, Do your homework and call your broker to learn about your account requirements

58.Moving your stop loss so you don’t get stopped out—This is a big, big mistake let me say this again, big mistake. I have heard many people say the market will come back, but it may come back but it might take 15 years or your margin will get met and you will have a margin account. A small loss is not a big deal, keep your losses small and then your winners will cover them and your account will grow.

59.Not setting alarms so that you know when you price levels are met—I have found that setting alarms when the price gets to a certain area I am looking for helps me to manage my trades better and have increased profitability.

60.Trading During the News and having bad slippage and execution—If you trade immediately after a news announcement your broker will give you slippage and you can enter a trade as far as 40 pips away from the price, maybe even farther than that. Learn about your broker’s limit ranges if you are going to trade during the news this will keep you from entering a trade and getting maximum slippage.

61.Trying to Predict the Market—Traders must trade as the charts instruct and not make guesses or predictions. If you are making predictions on what you think the market will do, that will increase your losses.

62.Trading When Mad or Angry—If you are not thinking clearly you will not trade well. Take a step back and let your head clear before making any trades. Making decisions like this is what separates a professional trader from a losing trader.

63.Anticipating Trades—This is similar to predicting the market but this is when there is a setup occurring based on your strategy but you are not being patient and waiting for the setup. Instead of waiting for the setup you jump into the trade before it triggers. Anticipating trade setups like this eliminates the filter that a trade setup creates. The whole purpose of a setup is to help to filter out bad trades and if you anticipate and don’t wait for the trigger you are defeating the purpose of the setup.

64.Building a position past money management rules—Building a position means adding to a trade which is not recommended unless you have learned good trade management skills. Also make sure that you have a predetermined plan ahead of time. If you do not it can lead to large losses very fast. Read this post about adding to your trade to learn a great way to add to your trade.

65.Not Having the right Equipment—Having a good trading computer and internet connection is important in trading and actually can impact your slippage, which in turn impacts your bottom line. It is also important to have good monitor to protect your eyes because you will be looking at the screen all day. In addition to that make sure that you have a good chair to protect your back as you will be sitting in it for quite some time.

66.Trading with the Crowd—Everyone knows the crowd is wrong, why are you trading with them?

67.Pushing the wrong button—I have done this one so many time it is ridiculous and as a matter of fact I have pushed the wrong button and it has caused me thousands of dollars. Ouch that hurts. It still happens but I have trained myself to be more conscious of what I am doing and I have developed systems of how I enter and exit my trades to reduce my chances of pushing the wrong button.

68.Trading Demo Too Long—This can give you a false sense of reality just like playing video games. I recommend demo trading to get familiar with trading and also to get familiar with your trading platform. Start with demo but go live quickly because otherwise you will not understand what it is like to trade live.

69.Not willing to take a loss—I know that losing hurts but it is part of the game and if you can’t except that then you need to do something a little safer…. Like surfing.

70.Giving Up Earned Profits—There is nothing worse than being up 50 pips, then watching the market reverse and take you out with a loss. The best way to remedy this is to put a stop behind your trade so that if it does reverse suddenly you will at least get partial profits.

71.Not Taking Every Setup.—Part of abiding by your plan is that you follow your rules every time, not just some of the time. If you aren’t taking every set-up, you could be missing out on profits. If your trading plan gives you more set-ups than you can take, make your plan more precise.

72.Sticking your head in the sand.—Pretending that a bad trade isn’t bad is only going to make things worse. Though it may be painful, close a position when it goes too badly the other way.

73.Fighting the Trend.—There’s a trend for a reason, don’t try to luck your way into catching the market just when it turns around, it won’t work. Only make a counter-trend trade when it coordinates with your strategy.

74.Changing Lot Size.—Trading different lot sizes does not necessarily reward a good trading percentage. If you happen to lose on the big lots and win on the small ones, you can win 75% of your trades and still be down.

75.Under Capitalization.—Not having enough room in your account can cause trades to close out and lose you money even when you make a good trade because it will dip low enough to take you out even on its way up.

76.Failure to take responsibility—Blaming the Market, Blaming God, Blaming your dog, Blaming that crappy forex signal service you subscribe to…. You get the idea. Trading is the real world and you are the only one responsible for every trade you make. Take responsibility and stop making excuses. It’s Your Fault!

77.Not looking at the big Picture—If you have to narrow a vision you could be looking at a 5 min chart and the trade looks great but if you forget to look at the daily you could be buying at daily resistance in the middle of a down trend. Examine all the time frames.

78.Not looking up close—If you’re trading the longer term charts, you can often zoom to a closer time-frame and fine-tine your entry point.

79.Jumping From system to system.—The more comfortable you become with a system, the better you will be with that system.

80.Not willing to wait and develop as a trader.—Trading is not easy, if you don’t do the work to develop yourself, you won’t become a profitable trader. Everything requires work to excel in it, Forex is no different. Remember this word: PROCESS, learning to trade is a process that takes time.

81.Giving Up.—The Forex market is difficult, and there WILL be times when you lose, but giving up will only make all the work and money you have put in worthless.

82.Losing Faith.—If you don’t have faith in yourself to succeed in the market, then you won’t. Confidence in such a difficult market is extremely important.

83.Thinking that the Market is wrong—The market is always right it is us who are wrong. Sometimes the market is overbought or sold but the truth is that the market is where it needs to be because people are the ones that put the market where it is by our buying or selling. People are behind the market and yes people are wrong but they will figure it out eventually and the market will adjust but don’t think that you are smarter than everyone else.

84.Lack of consistency—You have a plan for a reason, it is okay to fine-tune it, but once you have it set up, you must follow it.

85.Messy Charts—Covering your charts with so many tools and indicators that you can’t even see the price is not the answer to good trading.

86.Trading the news—The news is only a small part of what makes the market move, and often it does not make it move in the direction you would think.

87.Misinterpreting the news—If you don’t understand the news then doesn’t trade it. Sometime news does not make sense when a new announcement goes in favor of the currency you would think it would go up right? Well not always, do your research to see what the sentiment is how the market is trading and learn the correct way to trade the news before entering each trade.

88.Not taking breaks—Relax and take breaks. Don’t overdue your brains ability to process information.

89.Bad Eating Habits—Eat Right and exercise you may think I am grasping at straws on this one but being healthy affects every area of your life including your trading.

90.Having a bias—Being biased will cause you to trade based on emotion instead of strategy; never a good things.

91.Trading on Rumors—Making a trade because you heard from someone that a certain currency should go up or down is not strategic and should never be allowed by your plan, Most rumors are wrong.

92.Not Having A Life—Balance is key, spend time with family and friends and don’t live in front of your computer.

93.Not Maximizing Profits—If you are up on a trade, take some profit so you don’t risk a loss when you could be in a great position. Then leave a small piece of the trade on and let if run as long as you can. Over time this will greatly increase your profits.

94.Repeating the same mistakes over and over and over and over again—One thing that must be done to be a successful trader is that you must change. We all know that change is one of the hardest things for a human being to do. You have to want to change, in order to make it stick. So if you keep making the same mistakes over and over again it is time to change.

95.Not Having Have Guts, Courage, Fortitude, Mental Will Power, or A desire For Excellence—The Market is a tough place and you will have your good days and your bad days. The truly great traders don’t let the bad days wipe them out. This was one of the most important lessons you have to learn in trading. When you have success, are happy but stay calm and don’t let that success change your trading decisions. Or when you get hit for a loss doesn’t let it hurt your trading. I have been in both circumstances and both of them have derailed me several times. When you have good times or bad shake it off and stick to your plan. Don’t ride the emotional roller coaster it will kill your trading.

96.Lack of Focus while trading—Unless you have a set it and forget it trading strategy you need to be very careful about doing other things while trading. Such as reading email and talking on the phone. Sometimes you take your eyes off of a trade for one second….. You know what can happen.

97.Not Having Fun!—If you are not having fun then you are doing something wrong. Trading should be fun not stressful. If you are stressed, take a break relax and maybe lower your trade size. I have found if I am trading smaller lots I can handle draw downs much easier.

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Casey Stubbs is the founder of Winners Edge Trading, which is one of the most widely read forex sites on the web. Winners Edge Trading has trained thousands of people to trade the Forex markets.

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  • Thanks so much for the comment please come back and participate in any of our blog posts!

  • Nicole

    Article is
    very useful. Mistakes are the reason of lack of knowledge. While education in
    Masterforex-V Academy I speak with traders who wasted a lot of time and money
    before they realized how it’s important to have basic knowledge in forex
    trading. I will take a note to this article.

    Thanks Casey

  • Muhammad Farooq

    Excellent job. May God bless you
    Your blog resolved my lots of problems.
    Good!!!!

    Keep it up.
    Thanks

  • Vaidhyanathan Sankar

    holds good for myself

  • Gjert Myrestrand

    I have also learnt that it is very smart to stay out of the market before a big news announcement. For example, an interest rate decision from the FED or the ECB. Last week, many traders expected an interest rate reduction from the ECB. It did not come. Then the press conference from Draghi started. In the beginning of the press conference, the EURUSD fell a bit, then after half an hour, it surged to new highs. The momentum continued all day, and the EURUSD reached above 1,3360. My rule is to wait a minimum 30-45 minutes after big news to enter the market. The FX market often spends 30 minutes to 1 hour to settle after an important announcement regarding interest rates and labour markets etc. Anyway, I hope that the EURUSD has reached to top now…but if it continues up, I´m out!

  • You are welcome

  • Dev

    I am a new comer in the trading world and you covered all the mistakes I did…………………..great job.

  • You are welcome.

  • you are welcome

  • Thanks Adam!
    Casey

  • Thanks. He does indeed.
    Casey

  • Eluwa Clement

    This is a very good work.God must bless you for all your efforts in helping us.

  • I wish I would have visited you blog, in the beginning maybe I would have done better 🙂

    Thanks for the comment.

  • Dolmol_pol

    Hey did you really make all this mistakes ? Well , now I undestand why you are doing this blog , it is tough to earn money from trading so…:)

  • Thanks!
    Casey

  • Hahaha! That’s great. We need to add that one to the list.
    Casey

  • Robert

    Great job #98 never take a break and walk away from your computer with a 2 year old on the loose. I little guy has entered a few trades for me. But at least I can say he is a better trader than me.

  • Definitely. You have to keep the emotion out of it. Trade what you see, not what you feel/think.
    Casey

  • Pravin Alapati

    thanks a lot it help to avoid emotional trading

  • You’re welcome.
    Casey

  • Thanks Stephane.
    Casey

  • Thanks!
    Casey