Top 10 Things Not To Do In The Forex Market 2023

The forex market is one of the leading financial markets in the world. Millions of dollars are traded in this market daily. People invest their money in this market to take good returns in the long term, and many people do the trading to make a profit in the short term. According to the Triennial Central Bank Survey of FX and OTC derivatives market report in 2019, more than $6.6 trillion volume takes place daily. We can see the potential of this market from the daily volume of the transaction.

You can profit from this market in the short term and in the long time. Is that easy to take a good return from the forex market? It’s not that easy. A trader makes many mistakes in this market, and after losing all his money, he exits the market. You should keep a few things in mind when trading in this market to avoid losing money. So many people come into this market and, after trading for some time, they lose money. There are only a few traders who survive in this market.

Things to avoid in the Forex Market

Do you want to know what the reasons are for this? Today, we will see the things which you can avoid as a trader in the forex market. These ten things will help you to grow as a trader in the forex market. If you are a beginner, you can improve a lot in your trading journey as a trader.

Following these ten points can reduce the chances of losing money in the market and gradually start growing as a trader. People who are trade experts have recommended all these ten points and have also grown in their trading journey by keeping these points in mind. Let’s have a look in detail at all ten things that you should avoid while trading in the forex market:

  1. Start with the Demo account.
  2. Investing more than you can afford
  3. Proper knowledge about the forex market
  4. Lack of trading mindset or plan
  5. Going with the flow of the market
  6. Selection of the correct trading broker
  7. Start adding more in the losing situation
  8. Attempting to make more profit in a day
  9. Entering with the significant quantity in the market
  10. Avoiding technical tools of trading

Let’s see all these things in detail to understand it better:

1. Start with the Demo account

One of the biggest mistakes beginners make is that they start with real money without having experience in trading. Traders just starting in the forex market should begin with the Demo account. It means that there are applications where you can start practicing trading without actual money. Demo accounts will help you to get the experience of trading, and you will get to know how this market works.

You can find demo accounts on almost all trading platforms. One important thing that you can learn from demo accounts is that you will know the right time to exit the market. It is the most common mistake beginners make when they start their trading journey. 

They don’t know the right time to leave the market. For example, you are in a good position and making a profit, but you keep thinking about increasing more profit, and after some time, you lose all of your day’s gain into a loss. Now you can practice this without losing money.

Although you will not learn about the actual emotion of trading from the demo accounts because you are not trading with your real money, you can get the feel of how it looks at the time of trading and what points you need to keep in mind. So start with a demo account and the sense.

2. Investing more than you can afford

Traders often do this to get high returns from the market and ultimately lose all their money. A risk management strategy is essential when trading in the forex market. Otherwise, this may return in daily financial losses. Traders only invest their money and don’t think about tomorrow’s trading. Traders invest only the amount they can afford, even if they lose that amount in a day, so it will not affect your daily life.

There should be only 1% to 2% investment in forex money of your total capital amount daily. If you lose that money, don’t invest more than that amount. You also need to minimize the daily losses to survive long-term in the forex market. Mostly beginner traders often make this mistake, and then they don’t serve in the long run. The main thing is that you need to save your capital amount. Investing all or most of your capital will make you exit this market.

For example: If you have a capital of Rs 100,000 and want to start in the forex market. You should keep your risk management up to Rs 1,000 daily, which will be 1% of the total capital. If you even lose Rs. 1,000 will not affect you that much, but it does not mean you continue to fail Rs 1,000 daily. So, only invest the money you can afford without feeling guilty about losing.

3. Proper knowledge about the forex market

Forex itself is a complex market. There are lots of concepts to understand. Entering this market required a lot of knowledge and understanding of the various complex topics. If you want to make a good out of it as a trader, you should first understand and get the proper knowledge about this market before entering it.

Trading in the forex market without having proper knowledge may lead you to significant financial losses. It is like diving into the ocean without knowing how to swim. If you know about the stock market or are a beginner, you need knowledge about this market. The forex market is similar to the stock market, but many other concepts differ from the forex market.

If you are thinking of getting into the forex market without the proper knowledge, then you will not be able to survive in this market for the long term and will ultimately exit. You can learn about the forex market from many different platforms. There are many other courses you can invest in, or you just want to get it free of cost; you can find many resources online, such as youtube. So make sure to get proper knowledge about the forex.

4. Lack of trading mindset or plan

Mindset or the proper plan is necessary to start the day for trading. You may lose money if you do not create your day trading plan with a good mindset. The forex market is also affected by many factors available in the business environment. It can be any economic event or any global news. These factors may create volatility in the market, and if you haven’t aware of all of these situations in the day trading, your invested capital may be at risk.

It is the usual practice of expert traders to research which direction the market can move. They do proper technician and fundamental analysis of the market, and in that mind, traders enter the forex. Understanding the market with the help of technical analysis and all the tools is highly recommended to make a mindset for the day trade.

Keep this in mind next time when you enter the forex market for a day trade to make a mindset first with proper plat about the trade of the day.

5. Going with the flow of the market

It is one of the essential things to consider at the time of day trading. If you have already suffered a loss, don’t trade more on that day and exit from the market. This point will save you from losing excess money in a day. Traders also keep trading in the market even if they have already made a loss. It is one of the biggest mistakes that immature do. You need to work on the win rate and the risk-reward ratio.

If your risk-reward ratio is not good, trading is not for you. It means that if your losses are higher than the profit, you are ultimately not making any profit from the market. You should work on improving the risk and reward ratio. Ideal you can maintain this as 1.25. The benefit of retaining the idea of risk and reward ratio is that you will not face continued losses in day trading. So avoid trading if you have already suffered loss, and do not go with the flow.

6. Selection of the correct trading broker

You will find a lot of brokers in the market who are offering their services as trading brokers. You must select a broker who is reliable and secure. There are brokers’ platforms that may be scams, and you will end up in a scam. The broker should be registered as per the regulatory body; otherwise, it involves the money factor. In the end, so selecting a reliable broker is essential. You can consider the following point before choosing the broker:

  • Is the broker registered as per the regulatory body?
  • The customer base of the broker’s platforms
  • What commission is charged by the broker?
  • What kind of services are offered by the broker?

7. Start adding more in the losing situation

It is the most common mistake traders make after losing their 1 or 2 trades. They start adding more amount from their capital amount. The main intention of the trader is to recover the loss amount and make a profit on the same day. Ultimately, they start getting more losses after adding more amount to their trading portfolio.

How can you avoid this? You need to do one simple thing: see if it is under your risk and reward ratio or the risk capacity. Suppose the loss exceeds this capacity, exit from the market. It is the rule that you have to follow daily at the time of forex trading.

8. Attempting to make more profit in a day

Once the trader makes a good profit from the trading, he takes more trades to make a profit as he made the previous profit, but that does not happen. It converts from profit-making trade to loss-making trade. It is the essential thing that you need to keep in mind once you make a profit from the market. You need just exit from the market as per your risk and reward ratio and don’t trade on that day. Do these steps after the profit trade:

  • Start day trading with the proper mindset
  • Once you make the profit
  • See the risk and reward ration
  • And exit from the market
  • Don’t open the forex dashboard again on that days
  • You will be a successful trader now.

9. Entering with the significant quantity in the market

Beginners should remember that when you are going for actual trade in the market, only start with small quantities to have a taste of the market. Beginner traders avoid this point in the starting journey and begin with a significant quantity with massive amounts without the required experience. It ultimately results in financial risk.

Now, make sure when you are entering the trade you are only starting with small quantities, and yes, once you get a good experience with the forex, you can begin with significant amounts. It may be difficult for traders who have traded in substantial quantities in demo accounts and shifting from the demo to real money.

So, it is also advised to the traders using the demo accounts for the practice to make the trade in small quantities so that you don’t have to face any difficulty when you move to the actual trade account.

10. Avoiding technical tools of trading

In the trading platforms, you must have seen many technical tools, and there are high chances you have not used them, especially as a beginner. I think you have understated the potential of these technical tools. These tools can make you a professional trader,m if you have expertise. These tools help us to understand the potential direction of the market. So learning about these tools is essential as a trader.

Technical tools in the trading platforms also help to understand the pricing charts and direction of the price, and with their help, we can take a hint of the direction of the prices. So don’t avoid these tools and learn about them to become an expert trader.

Final take on this

These are the Top 10 things not to do in the Forex Market to become a successful trader. It will help you to polish your skills. We have recommended these mistakes that traders usually make in the forex or stock market. You will see the importance of these top 10 things once you start applying them in your daily trade as a trading rule. It will take time to take all these into your daily trading, but eventually, if you do, you can do far better than others.

In the forex market, many people come, but due to a lack of the above, they could not survive due to the lack of proper guidance. This market can give you a good return if you take this as a business and work on your skills and knowledge. I hope you will like our efforts and show your appreciation by commenting below. 

Frequently asked questions (FAQs)

What are the common mistakes in Forex trading?

There are many mistakes that traders make, but one of the most common mistakes is that traders start investing money even if they cannot afford the same, and they end up losing the entire capital.

Why do most forex traders lose money?

Traders lose money because of their continuous mistakes and don’t learn from them. This result in the loss of money. So focus more on the learning before the earning.

How many traders fail in forex?

Many people come into this forex market, but more than 80% of people fail here, and only a few survive in the market as a trader.

How long does it take to learn forex?

Learning is a never-ending process. As such, there is no time limit to learning. However, if you want a good understanding, it will take about 12 months to clear all your basic concepts of the forex market.