Day traders get an easy entry into the Forex market. Remember that making money is not as easy as getting entry into the market. Day traders do some mistakes for which they face a great loss. Some mistakes are discussed here which are the reasons behind their failure.
Risk-Reward Ratio
Your win-rate indicates the amount of winning trade. This is manifested through percentage. For example, if the trader has win 40 trades out of 100. The win-rate will be 40%. Remember that this is necessary to keep the win-rate over 50 %. The Risk reward ratio is the ratio of the stop-loss and the take profit. As a trader, you have to decide the risk factor in each trade. For example, if the trader sets stop-loss at $200, and takes profit at $400. The risk to reward ratio will be 2. As a day trader, you need to maintain this over 1. So, you have to try to maintain this to make profitable trades.
Not focusing on the Stop-loss
Sometimes, the traders do not emphasize setting stop-loss. You should remember that your plan must include stop-loss. Stop-loss helps you to reduce your cost. If you do not set a stop-loss, your capital can be finished. The market is unpredictable. Sometimes, the market can go against you. Stop-loss will help you to not facing great loss that you cannot handle. So, focus on this issue. And never trade the listed options with an aggressive attitude. Be conservative with your actions and keep your investment safe.
Taking High Risks
Sometimes, the traders take high risks. As a day trader, you should not take risk more than 1% of your deposit. So, you have to set your stop-loss in a way so that it closes the trade before the losing streak goes more than 1%. Stick to your plan. For making money quickly, most of the traders do overtrade and take high risks. Try to avoid this. It can cause great loss. Your foremost duty is to save your deposit. Without this, you cannot do trade. Try to increase your deposit more than your expenditure which will help you to go in the long run.
Selecting a Wrong Broker
A broker is very important for your trading. Brokers offer a trading platform which is very essential for the buying and selling process. The trading platform facilitates you by providing the latest indicators and tools. So, before choosing a broker you have to consider five things. Firstly, specify your requirements. Then, the facilities are offered by the brokers, take references from the other, trial the broker through a demo account, and do not accept their proposals of bonus with their service.
Before choosing a broker, you need to identify whether the trading platform is user-friendly or not. Many day traders choose the wrong brokers and face problems. Sometimes, the traders do not get supports from the brokers. Remember that you can face difficulties at any time. So, find out if the broker can provide you information when it is necessary.
Having no fruitful plan
If you want to fulfill your goal, you have to make a plan. Without making a plan, you cannot trade properly. Professional traders always make their strategy. Before making a strategy, you need to analyze the market. Try to observe the discrete points of the market. Gain knowledge about the variables factors which influence the market. If you do not make a plan, you will make a decision emotionally, which can force you to see a destructive loss.
If you have a plan, you can understand what to do. You will able to know how to manage the risk and secure the capital. Sometimes, you need to make some minor changes to your plan. Make some practical changes. Remember that trading is not gambling. This is a serious place. Do not execute your trade, without a plan.
