There are so many quotes and talk out there about learning from mistakes and how success comes from our mistakes. You’d almost think you should invite mistakes into your life!
Here are some well-known and often repeated quotes that give us the warm fuzzies about our mistakes:
“Mistakes are the portal of discovery.” – James Joyce
“Do not fear mistakes. You will know failure. Continue to reach out.” – Benjamin Franklin
“Mistakes are always forgivable if one has the courage to accept them.” – Bruce Lee
Can this be real? Should we really be inviting this doom into our lives and be that casual about an error?
If you don’t take forex trading mistakes and errors seriously, the market is going to eat you for dinner.
Forex Trading Mistakes Cost You Dearly and Keep You From Your Dreams
A forex trading edge or any trading edge is usually not so large when you break it down to its key drivers. Yet the impact of a mistake can potentially be huge.
Even if you’re starting out with small trade sizes you’ve got to take every mistake so seriously as though you were trading a massive trade size. As you trade more the cost of errors will become larger and more devastating.
When you’ve done your forex trading system analysis you’re typically not allowing for any mistakes so they will only keep you from your goal.
1. Quantity Error
Absolutely don’t make a quantity error, most especially with zeros and decimal placement.
For example, imagine the devastation if you were supposed to trade 0.05 and you “accidentally” placed an order for 5.00. That’s 100 times! If you’re lucky the system will stop you if you have insufficient funds to carry the trade, but there’s a possibility it won’t.
An error like that may have a long-term impact on your heart health as you watch the zeros flashing across the screen, so take action to avoid it at all costs.
2. Wrong Direction
You’re supposed to go long and go short instead or vice versa. It’s easy to do with market orders if you get a rush of blood to the head and hit the wrong coloured order in the haste to get the price you were after.
Well that just cost you the spread you paid to enter and the price move between your entry and exit going the wrong way.
Yes, I know you may make money on the price move of a trade in the wrong direction. You must not celebrate or think good of a profit you make from an error.
3. Wrong Price
Sloppy entering of entry and exit prices can find you trading something entirely different from your system.
Check, check, check. An error entering prices is careless and unnecessary. The worst kind of mistake because of how avoidable it is.
4. Forex Spread Error
You’ve worked out your entry and exit prices on a trade based on the bid chart you’re looking at. Now it’s time to place the order.
The spread must be added to the buy orders. If going long, you buy to enter so the entry price is adjusted up for the spread. If you’re going short, you buy to exit so the exit prices are adjusted up for the spread. The exit prices include your stop loss, trail and target orders. With the spread, it’s always “plus the spread”; you’re adding.
Never forget to adjust for the spread or you’ll find yourself missing a system entry or trading a position with exit prices in places where your trade may still be looking right.
5. Insufficient Funds
Make sure you have enough funds to trade your open positions, take a planned loss if they go bad and cover the margin plus a buffer.
If you trade too big a trade size with insufficient monies in your account you may find the broker closing your position before it reaches it’s natural conclusion. Either that or you end up with a margin call.
Ensure you’ve got the right amount of capital in your account to trade. When you’re working it out don’t miss my article “Forex Leverage – Don’t Flush Your Trading Capital!” about using leverage and broker risk. This may save you big time!
Identify, record and eliminate forex trading mistakes
When it comes to mistakes you’ve got to be your own worst enemy. Fear yourself if you make a mistake. More than likely no one else is going to be there to enforce the control but YOU.
Put in place strategies and procedures to stop mistakes from happening so you can trade profitably.
YOU CAN DO IT! You can trade error free so take massive action to achieve it.
- Do you trade error free or are there mistakes you need to eliminate?
- What controls do you have in place to stop you from making trading mistakes?
- Do you beat yourself up if you make an error or are you very accepting of yourself?
- What’s your attitude and opinion about trading mistakes?
Share your thoughts in comments below. I’d love to hear from you.
Please leave a comment below and click the like/share buttons
About the Author: I’m Rachel Hunter, TraderRach, a Forex Trader who helps traders achieve the life they love with forex. Be strategic and design your trading business for sustainable success and have fun! That’s my mission. Join many traders’ gaining the edge with “10 Powerful Lessons for Forex Trading Success” plus other goodies. Years of precious learning specially packaged up for you. My background before trading is as a Chartered Accountant and Chief Financial Officer. I know what it takes to make a trading business rock on. It would give me great pleasure to make a difference to your success.