When you trade the forex rates there are a number of mistakes that you could be making. It is important that you know what the potential mistakes you could make are before you actually make them. This allows you to avoid them as much as possible and allows you to escape the negative impact that you get with the mistakes.
How You Trade Around Forex Rates News
There are a number of mistakes that traders make when they look at trading on the forex rates news. The mistakes are made before the news is released and directly after the news has been released. You should know what all of these mistakes are so that you can avoid them in your trading.
Before the news is released many traders make the mistake of having an open trade. This open position may not be related to the news, but is dealing with a currency pair that is affected by the news. You should always close all of the trades that you have on currency pairs that could be affected by the news. You have no way of knowing which may the market is actually going to turn or what the news will say. This means that your winning open trade may turn into a losing trade.
The second mistake that many traders make with the forex rates news is that they trade directly after the news has been released. Some traders will assume that this is the best time to trade. However, this time is generally volatile and without the strong movement that you should be trading on.
Ignoring the 2% Rule
When you trade on the forex market you need to have rules that help limit the impact of trading risks. The 2% rule is one of these rules that will limit the impact of trading risk on your trading account balance. The 2% rule states that you are not going to risk more than 2% of your trading account balance on a single trade.
When you ignore this rule you are going to risk more of your trading account then you should. This means that when the inevitable loss comes you are going to take a serious hit to your trading account. There are some traders who deplete their trading accounts because they are not following this rule.
Having Unrealistic Expectations
The biggest mistake that you can make on the forex market is to have unrealistic expectations. This is a mistake that many traders make before they even start to actively trade. When they set up their trading goals they will be expecting too much from the market. Once they start trading they will be expecting too much from their strategies and what they can realistically do on the market. There are a number of ways that this can play out and you need to know about them.
When you have unrealistic expectations for your profits then you are not going to be able to reach your trading goals. This will cause you to trade with more risks than you should and this will inevitably lead to losses on the market.