How to Avoid Pit Falls in Forex Trading
The first thing you should do is to demo trade until you have fully understood how to use your choice indicators, this is very important, if you want to start trading with $500, then open a demo account of the same amount. If you can make good profits consistently for 3 months then you are ready to start a live account. This is the major reason why more than ninety percent of Forex traders loose their money, some of them may decide to trade based on tips of signals from others, observe that if you get a signal a minute late you can loose your money. Learning how to get the right signals yourself is always the best and also never rely fully on software for signals always cross check with your indicators.
You must have a trading journal, this is very important, there are situations where people loose up to 20 trades from the same mistake, nobody is perfect so you will have to take observe of all you are doing and why you did them. Also when demo trading using a journal will help speed up your understanding. Try to document all your trades, the signals and the outcome of all your demo trades, this will help you know better how to get signals from your indicators.
Have a trading plan, if you are not new to Forex trading you must have heard the sentence, plan your trade and trade your plan. This will help you control your greed, if you have a daily target, follow it and also this will help you know the best time to trade, in planning your trade this will begin from your demo trading, observe the money pairs you are trading and the best time that you make profits. Professionally the best time to trade is early in the morning and late in the evening, this is so because at this time news do not affect the market, so using indicators alone can give you a good consequence.
When using software and robots make sure that they are new ones, this is important because after six months most software and robots do expire and hence can make you run into great loss. Also never use a software or robot on a live account because it did well on a demo account, this is not good because most robots perform extremely better on demo accounts. Lastly I will advice that before opening a Forex account, first do a thorough research on the best broker to use, some broker are not too good, some will allow you place funds easily, but will make it difficult to withdraw your funds and also some of them are slow and have high spreads. So make sure you use a good broker