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Currency trading comes with its own fair share of complications, especially for a beginner. Add making mistakes to the mix, and you will have financial woes added to your list of complications. Mistakes in currency trading can be quite costly. Some mistakes may not have drastic or far-reaching consequences, yet some can be fatal, causing you great distress financially or otherwise.
Deadly Currency Trading Mistakes you Must Avoid
As a trader you must avoid an attitude of not wanting to be taught. Investors often want to jump onto the forex trade bandwagon without proper knowledge of how the markets operate, the terms and risks involved, amongst other things. The forex market is the biggest market in the world and is complicated. It is detrimental to every trader’s financial future in the trading business to jump into trading without knowing the basics of foreign currency trading. Every trader must therefore take a basic course in currency trading before doing any actual trading.
Every trader must avoid use of excessive margins. As a trader you must not let greed and ambition blind you into a big margin debt. You can borrow from your broker from time to time to increase your profits if you have an account with one. You must however stay away from margin debt until you have fundamental knowledge of the markets. Margin debt carries high interests.
You must also avoid going on safe tips as given by others. You cannot go into big transactions on the basis of tips. Tips are good and may be a great way of making profits but tips are exactly that, tips. You need to make your own research and also to make sure you have your facts right before you make big transactions.
You must also avoid going on low rates, this happens when a currency rate is too low. When this happens, the temptation will be to buy that currency in the hope that when the rate goes up, your profits too will go up. Sometimes rates do not go up, and the worst may actually happen that the rate declines even further, which will spell great losses for you. You must know why the rates are so low before buying a currency.
Currency Trading and Information
You must always make sure that you trade on the basis of facts and correct information you have personally verified. You must avoid trading on predictions and instinct. Know your news, assess the market first before you make any forex trading decision.