Forex Strategy Trading Tips: The Most Common Forex Trading Mistake And How To Avoid It

Being a Fx trader you're going to have to develop several skills together with developing reactions to several trading scenarios. Sometimes it is easier said than done. After helping hundreds of traders, I've noticed that most of them are unsuccessful at Forex strategy trading for the exact same reason, they over-trade. So how do you know when you're over-trading? Heres a quick guide that can assist you recognize when you find yourself over-trading and the way to stop it.

How many strategies are you currently using?

Ive met folks who were trading between 5-10 different strategies not to mention there were not making any money, but why is that? Well, apparently the more strategies you employ, the less you focus on the market itself. Getting to know the market and your strategy is essential to becoming profitable and consistent, but this is impossible to do when you've got 3, 5, or 10 different strategies to focus on.

How much have you been risking on every trade?
Focusing on how much youre risking is incredibly more important than understanding how much youre going to make. This is exactly why money management is very important. I have come across traders move from the losing side to the profitable side simply because they implemented money-management into their trading.

How do you feel when youre making profits?
The most typical response to this question is great, and many people do not realize they've become greedy until it's already happening. As humans we are likely to get greedy when situations are running smoothly for us. Ive been there, done that, and the result was not good. When you get greedy you are more likely to act reckless and commit mistakes.

After asking yourself these questions you should have a much better idea of where you are. Over-trading is often as harmful as utilizing a strategy which has a low ROI (return on investment). Now lets discuss how you can prevent yourself from over-trading.

Have a trading plan: you should know where you are going to exit a trade BEFORE you even enter it. Also, make sure you have a set of rules in place for other trading variables such as take profit levels, stop losses, and progressive TPs.

Learn about your trading style: this is extremely important because the type of MM (money management) you employ for one trading style is different than the one you use for another one. If you are a scalper you will probably use small percentages in each trade (0.5% to 2%) as you are taking so many trades. A swing trader might use a larger percentage like 3% or 4%, it all really depends on your trading style and Forex strategy you use for Trading. For that reason, learning more about your trading style will help you to be effective as a trader and take better decisions.

I will be posting more tips on how to avoid overtrading on a future article, thank you for reading and happy trading!
Sincerely,

Jay Molina
Advanced Fx trader & educator