Using an FX Converter and Other Dangerous Advice
New traders always look for advice that helps them trade more successfully on the forex market. However, not all advice is actually good and some can be dangerous for new traders. It is important that you know what this dangerous advice is so that you can stay away from it.
Trade Your Local Currency
Some new trades are given the advice to trade currency pairs that have their local currency in them. While this may seem like a logical thing to do it can actually be dangerous. Traders generally have access to information that affects their local currency and they may even understand all the factors that affect it. However, the currency may be part of exotic currency pairs that are harder to trade. You should start trading with major currency pairs which offer the best volatility and liquidity.
Don’t Trade What you Don’t Know
While this is actually sound advice it can be dangerous if taken too far. The only way to make a true success of your forex trading is to expand your comfort zone. If you are most comfortable trading in a trending market then you only have around 20% of the market time to work in. You have to diversify your trading to a point where you can make the most of the market. This does not mean that you should constantly be looking for something new. You need to be realistic in what you can trade but do not stick to the same thing if it is not working or making you sufficient profits.
Trade Many Different Currency Pairs
The thought to trade a number of currency pairs may seem like a good one but this actually negatively impacts your trading. You can only analyse a certain amount of data in a day and place a certain number of trades. If you are using a number of different currency pairs then this amount of analysis will increase to an impossible point. This will cause extra stress which causes bad trades and emotional trades. You should stick to a few currency pairs that you are confident and comfortable trading. Most successful traders only have a couple of currency pairs that they trade.
Using an FX Converter
An FX converter is a tool that many people use to check what the forex rates. While this does give you an idea of what the market rate should be this is generally not the rate you will be getting. The rate you get with the converter does not include the spreads your broker will add. There is also the chance that the rate you get from the converter includes spreads from a different broker. This is generally the case when you use most free converters.
Try a Certain Strategy
Most new traders do not know which trading strategy to use. When they look for advice they are often told to use a certain strategy that is sure to make them profits. There are no strategies that can work for everyone otherwise everyone would be making a profit on the market. You have to find the strategy that suits your trading style and your personality. Only when you find this strategy will you be able to trade successfully on the market.