Why Experienced Traders Make Costly Mistakes? If you are a beginner trader in the world of Forex, you may not realize the extent of the risks that experienced traders are exposed to. It is not necessary for experienced traders to win all their trades. They are human beings like you and me, but they have learned a lot and have gone through several circumstances that made them aware of the nature of the market and how to deal with it.
How Experienced Traders Make Costly Mistakes
Overconfidence: A Silent Risk
Of course, after several years of trading Forex, you will be confident in your decisions and the way you enter into trades, but this confidence is a double-edged sword that can cost you a lot if you make any mistakes, and you can make many profits if you use it to your advantage.
Overconfidence may make you make a lot of mistakes and forget the nature of the market that this market is much bigger than you and that many people with experience who may be several years older than you in forex. It is possible that after these many years of experience in Forex, you will lose all your money with a simple mistake just because you ignored the nature of the market and thought that you were bigger than Forex.
How years of success can lead to overconfidence.
It is not related to a specific time. It is possible that after entering the Forex market for a month or two and winning several trades, you think that you are confident in your strategy or the way you analyze the market… I am not saying that this feeling is bad, but exaggerating this feeling will make you make many mistakes in the future.
We can call a trader experienced after he has traded on a real account for at least a year and has achieved good and continuous profits as well because demo accounts are for training on the strategy, but real accounts come with feelings related to trading and also come with the feeling of profit and loss that the demo account lacks.
Once you have traded on a real account for at least a year, you will have understood the nature of the market and will also adapt to it and to your strategy and the way you see the market, you may take longer than one year so, don’t rush and take your time
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Failure to Adapt to Market Changes Make Costly Mistakes
The market is constantly changing
Not adapting to market conditions is very important for your success, because the Forex market is constantly changing and if you cannot change with it you will be surprised that your method of analysis has become a loss instead of a profit even though the entry conditions have not changed but the market has changed
Sticking to an old analysis strategy that lacks adaptation to market conditions may make you lose more and more because the market is constantly changing and you must keep up with this change that occurs in the market from political events and the analysis method as well.
I am not telling you to change your trading strategy, but you should develop it. Any trading strategy can be developed for the better, and certainly, after you understand the strategy, it becomes easy to develop it very simply.
Relying Too Heavily on Past Success
If you were a successful trader in the past and stopped trading, do not expect the market to remain the same and wait for the same result. It is natural for the market to change constantly, and at this moment you will be surprised by the loss because you were used to profit, so try not to rush back to Forex. Take your time and learn. There is no shame in that until you get results like those that happened to you in the past and much better.
The Importance of Continuous Learning to Reduce Mistakes
Importance of Continuous Learning
Being constantly learning and keeping up to date with market conditions is extremely important to reduce mistakes in the future. There are many ways that can help you in continuous learning, such as social media, where you can follow market news moment by moment, and also YouTube channels, which are full of very useful and free courses.
Learning from both successes and failures trades
Learn from your mistakes that lead to loss and also learn from your winning trades. Your losing trades tell you that you made a mistake in analyzing the chart or Not following the news …etc, if The result of the trade was a loss. and Winning trades tell you that you analyzed the market well, so the result was profit (not necessarily, but this is the closest explanation).
Try to write every trade you open. write the reasons for entry and exit, the final result, and whether there was news that forced you to exit the trade with a profit or loss, etc. Try to write all of that down on a piece of paper or in an Excel file, To find out your mistakes and try to fix them.
How to be adaptable in forex?
First, you must constantly follow what is happening in the market, and you certainly know what I mean, which is the news and important economic events that occur in the world.
Many news could happen at any moment, such as an assassination attempt on an important politician, or the occurrence of earthquakes and hurricanes, etc. In such situations, you have two choices: either resort to safe havens, which are gold and the Japanese yen, or not make any decision and watch and learn, To not make any mistakes.
Secondly, take another look at your strategy. For example, if you were trading using technical analysis and you noticed that there is a loss that is constantly occurring, even though your method has not changed, you didn’t make any mistakes In this case, but what has changed here is the market. The market is moved by market makers, and technical analysis is a trading method full of traps by market makers.
If you are not well aware of these traps, you will lose more and more, and the reason doesn’t need to be technical analysis, even the rest of the analysis schools, market makers have many traps in them that make traders lose continuously, as market makers are your enemies in Forex, and knowing their tricks is very important to avoid losing.
There is no shame in admitting your mistakes and trying other strategies if you are bored with your current strategy, you may look for other strategies or methods to be able to trade effectively, as the main goal in the Forex market is to make money, right? Not to brag that you are a Forex trader, You will probably find a good strategy that will help you understand the nature of the market better and better and will achieve more profits than the previous one.
Ignoring Risk Management Makes Costly Mistakes
Risk management
After several years of experience in Forex, you may ignore several factors that you have become accustomed to during your trading journey, the most important of which is Risk management. Most of us may think that Risk management is an obstacle to wealth. Without it, we may become rich overnight.
But this is a big mistake and Risk management protects your money from rash decisions that may occur over time of course you may agree with me on that because there are many opportunities that occur in the market continuously and risk management helps you make a decision to risk a little of your money in your trades in the hope of pursuing these golden opportunities and then you will risk a larger percentage
It is possible that you become arrogant and think that you have controlled the market and have fully understood what is happening in the market and neglect risk management and risk a large percentage of your account. At this moment, you will make completely illogical decisions because the psychological factor will control you completely. After all, This small mistake could result in a huge loss of your money and this could destroy you.
For example, you may move the take profit and stop loss from their original place where you decided to put them before opening the trade for fear of losing your money or for any other reason, but I assure you that this is largely an illogical reason at all, and you will notice this after closing the trade when you focus on your decisions. At that time, you will be surprised by these illogical decisions.
Emotional Attachment to certain pair
You may have gotten used to trading a certain pair, and in fact, I prefer to focus on one or two pairs that I trade on constantly, but if there is news on this pair or if it is not possible to analyze this pair now, should I trade on it? Being emotionally attached to the pair may make you make a lot of mistakes and will lead to big losses, I understand that you have profited from this pair a lot of time and have gotten used to it, but the pair does not know you, right?
So don’t try to convince yourself that this pair will not make you lose, it does not know you or me, it moves based on supply and demand, that’s all, so accept that you may lose if you go against the market or your strategy and stay away from the market at times that are not appropriate for you
Overtrading: A Common Pitfall
overtrading
Being right in your trade and making a profit is a good thing, right? But do you let this feeling control you? Of course, we all want to win and feel this wonderful euphoria, but after several winning trades, another feeling may control you, which is arrogance, and you will try to over-trade in this case.
Overtrading is an enemy of the successful trader, as you may set a maximum limit for trades during the day, but several successful trades may make you think that you are the one who moves the market and in this case you will open a high-lot trades, ignoring risk management and the plan you set in the beginning.
Don’t get me wrong, there is a difference between overtrading and trading logically. You may see very good opportunities in the market and want to exploit them, so you open the first trade and it hits the target, then the second trade, and your analysis and vision of the market remain the same, and the market actually respects your analysis, and London & Newyork Sessions are still open., so you may enter into more trades. There is nothing wrong with that.
But the problem here is that you may have one or two profitable trades and then a signal comes that the trend is reversing. In this case, it is a signal that contradicts your analysis because you have analyzed that the trend will continue, but you decided to enter a trade against the trend. It is also possible that the London & Newyork Sessions have closed, which means that you have ignored other factors to enter the trade which is momentum.
What should I do?
In order to get rid of overtrading, you must set a maximum entry limit per day and also a maximum entry limit per week. It is preferable to write all of this on a piece of paper, as well as a maximum limit for the number of lots allowed in each trade. If it is a normal opportunity, the lot will be small, and if it is a golden opportunity, the lot will be slightly higher, as golden opportunities do not occur daily in the market and can be exploited with higher risks than usual.
Accept that you may break these rules at any time. By saying this, I am not telling you to break the rules, but it is possible that you may make a mistake and open more trades than usual or even a larger number of lots. If this happens, do not be sad or despair, and accept that you made a mistake and try to exit the trades with the least possible losses, and try to avoid this action the next day.
Summary
Being an experienced Forex trader does not prevent you from losing, as losing can happen at any time, but before losing, some signs indicate this, including that you may become arrogant in your trades or try to break rules that you have set for yourself to prevent losses, such as risk management, or that you overtrading. Always try to be a trader who seeks to learn and develop himself It will make you avoid a lot of mistakes and make continuous profits in the end.
