We all have our bad habits and forex traders are no exception. The only difference is that forex traders will end up losing money if they keep up with their bad habits. Many forex traders do not even know that certain things they do are ultimately bad habits. Some of these bad habits of forex traders are identified below.
Losing Sleep to Make Money
A certain trader told of a position he had been watching for days. He had been in profit all this while, and wanted to stretch the profits even more by staying awake until a big move he had been expecting played out. Well, on the day of the big announcement, he was forced to stay awake to monitor this call and the effect it would have on his trade. But after several days of cutting sleep, he just could not stay awake. In what seemed like seconds, he put his head on his table and slept off, only to wake up to see the entire position completely obliterated. The news had disappointed the markets and the currency he had his money on sold off, wiping off all his profits. He later wrote that it was as if his brokers were watching him all the while and took him out while he slept!
The problem was not his broker. It was sleep deprivation. Many traders routinely stay awake to trade during trading hours when they should be having a good night’s rest. If you keep it up, it will catch up with you and you may pay with your hard-earned profits.
Chasing Pips All Over the Place
Some traders want to trade everything tradable. They jump from one currency to another with no understanding of currency behaviour or fundamentals and end up becoming a ‘Jack of all currencies and master of none’. A smarter approach is to follow a limited number or assets and become familiar with the technical and fundamentals of trading them.
Continually Adjusting Stops or Trading Without One
Continuously adjusting stop loss settings when the market is moving against the trader is like changing the position of a picture around the same wall, knocking in a new nail all the time until the wall begins to look like a dartboard. Instead of being willing to take a small loss, the trader begins to widen his stop loss to stay in the game but may end up losing more than they were prepared to. Sometimes you have to let the bad ones go and wait for the next opportunity to come.
Different traders have different styles and approaches. Whatever your method, just be sure to learn from past mistakes and not fall into the habit of repeating the bad ones.
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