Life is full of struggle. People start working very hard early in the morning, and all day long they are doing various activities only to support their family. But do you think that this is enough to make their life better? In fact, a significant portion of the people in the United Kingdom is not satisfied with their month earning. You can have the best education from the top class university and graduate with the excellent academic record, but this doesn’t mean that you will be provided with a decent job. For this reason, people are always looking for an alternative source income. After doing various research, many people consider trading as their best source of income since they don’t have to rely on other people. But do you think that you can make money without learning the art of trading? Now we will point out some of the most common mistakes that every novice traders make.
Lower time frame data analysis
As a technical trader, you need to know that the smaller time frame consists of lots of false spikes. If you look at the experienced trader, then you will understand how hard they are working only to avoid the wrong trading signal. They are always doing their technical analysis in the higher time frame so that they can trade the positive signals only. On the contrary, the novice traders are always searching for trading signal in the 1 minute or 5-minute time frame. It’s true that you will be to execute lots of trades in lower time frame data, but eventually, you will also increase your risk exposure. This market is all about risk management. If you fail to trade this market without managing the risk, then you should never become an active participant in this market.
Ignoring the fundamental factors
Those who are involved in options trading for an extended period knows how important the high impact news can be to the professional trader. The long-term prevailing trend of the market can get changed within a fraction of second just because of the major news release. There are two types of major news release
- The high impact news release
- The low impact news release
The high impact news release is the dominant price driving catalyst in the fore market. For instance, if the U.S government change their interest rate all of a sudden then we will see a sharp rise in the U.S dollar index. Such an intense rise will cause the U.S dollar to trade significantly higher against all major pairs in the global market. On the contrary, the low impact news doesn’t have a significant impact on the worldwide market and traders can trade with an extreme level of confidence. Understanding the fundamental factors is hard for the novice traders, but if they work hard, then it’s just a matter of time to develop their fundamental skill.
Some traders often say that this market can be traded based on technical analysis skills which are completely wrong. As a professional trader, you need to understand that you can never develop a balanced trading system based on your technical analysis skill. If you are new to this market, then it’s true that you will prepare technical analysis, but over the period you will gain experience and understand the importance of fundamental analysis
There is saying in the Forex market. The trend is your friend. Everyone wants to follow this proverb, but only 5% of the traders can follow this. Without learning all the details about fundamental analysis, it’s nearly impossible for a particular person to learn the art of trading. Make sure that you discover about the advance money management technique so that you can deal with your losing trades in an efficient way. Last but not least always have six month financial backup when you consider trading as your full time profession.