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Common mistakes in forex trading

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As beginners, we are all bound to hit a wall every now and then, and with forex trading it’s no difference. I remember myself, when I started out, that I thought I knew everything and was going to start earning big time straight away, but I was wrong. It took me at last a couple of months before I actually started to make any real profit from trading currencies, and I learnt a few lessons along the way, mainly from reading articles on trading portals such as Cambio Divisas. In this article I thought I’d share some of the mistakes that a lot of beginners make.

First of all, it’s very common for new traders to just pick a random forex broker and start trading before actually looking if it’s good or not. The first thing you should learn is that you have to pick a broker with a low spread. The spread is the price difference between buying a currency pair and selling it. The buy price is always higher than the sell price, and this is how the forex brokers make their money. As a beginner, you think that the price difference is so small that it’s not going to affect your investments, but you will soon find out that the forex market is fast paced, and with a high amount of trades, the spread can really take away a lot of profit from you. You can find good brokers with low spreads at site like forextrading.pm which is a trading portal that reviews different forex brokers.

Another mistake is that beginners start trading too fast. I recommend everyone to start off by opening a demo account with a broker, which gives you a chance to start trading with “fake money”.  You can find several forex brokers offering demo accounts on this website! This will give you a good base, and you get plenty of time to learn how forex trading actually works, without having to risk losing money.

Many new traders don’t know how to manage risk properly, and far too often I see them making investments that are just way to big in relation to their total capital. You should never invest more than 5% of your total capital into one single investment, no matter how good you think the trade is. A lot of beginners also seem to over trade, meaning that they make too many investments in short amount of time. You need to realize that the single most important part of a trade is the research you do in order to decide whether the trade is good or not. If you just keep showing money into different currencies without analyzing the situation, you will not achieve long term success.

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