Forex Mistakes

I have just completed my 1st week on a dummy run, using a real account whilst I re-learned how to use the metatrader forex trading software. I recommend that you familiarise yourself 100% with the platform or any other forex software that you are using BEFORE trading with real money.

These figures will not be included in the challenge as I aim to start "for real" in a couple of weeks time. The mistakes I made could have been catastrophic if you are new to forex.

Week 1 (trial run)summary

The good news was that I increased my bank 24% in one week. From a starting balance of $2000 my account stands at $2484. Drum roll.......

BUT

I have certainly had some teething problems. I thought long and hard about putting a copy of the trades on line. I was so embarrased with some of the things I did this week. This is an example of about 8 out of 10 of the things NOT to do in forex.

Let me explain.

On my main account I trade for considerably more than $1 per pip & with an average stop loss of 100+ pips. If i make a mistake or dont place my trade correctly I stand to lose $1500+. Therefore, clearly, my priority is to place that trade 1st & make sure everything is correct, stop loss, profit target etc.

Then I go to metatrader to place the $1.000.000 challenge trades. As a result I am in a rush. On my main account I dont use metatrader to place the actual trades. It is a long time since I used it so I had forgotten how to use it properly. As a result I made loads of "newbie" mistakes.

Forex Mistakes

1. I sold a pair instead of buying (pushed the wrong button would you believe)! Result lost
   
2. Set the stop loss wrong by 100 points on 1 trade. Spotted it eventually & got away with it but could have lost 100 pips more than the intended stop loss.
   
3. Failed to set a stop loss on more than 1 occasion ( I thought I had but I was in a rush), could be wiped out if market turns sharply against you.
    
4. Overtraded. Did too many trades.
    
5. Got out too early on 4 or 5 trades that went on to make big gains. These trades in my main account gained 220+ pips more. In my defence this will be a problem in the 1st few months. It is vital that we dont lose in the early stages so it will make me nervous & more prone to get out early.
    
6. On Friday I made the mistake of selling the gbp instead of buying it, this was the wrong button that I pushed in point 1. To compound the problem I Hedged*. Moved a stop loss - NEVER do this. I was in a trade that went against me. On the longer term charts I "knew" it was going to go in my favour. So I opened trades in the opposite direction. I had bought the pound & then had to sell it & the euro at the same time. I got away with it to some degree, but it is not a practise I recommend.
    
7. Got in late to trades. If price has moved already you should stay out. This again will be a difficulty with this challenge. Because it takes me 3 or 4 minutes to place my main account trade(s), by the time I get to metatrader the price has already moved. Normal rules say stay out. However as I am trading off the longer charts then I still took the trades.
   
8. I had a good trade, but needed to go out. I set what I thought was a trailing stop of 40 pips and went out and left the trade running. When I got back the trade had lost a small amount because I had not set the trailing stop correctly.
   
   The trade went on to win a further 120 pips on my main account. Therefore we would have been looking at a 30% increase this week instead of "only" 24%.
   
   

Conclusion.

Lessons learned

1. Always trade a demo account & learn the trading platform 100% before placing a trade. Even if you are not new to forex.
2. Follow your trading rules.

With a combination of my experience & luck I managed to get away without being punished for my mistakes. If you are new to forex then you would probably not be as fortunate.

* Hedging in forex: You are long in a pair & the trade starts to go against you.  If you hedge you open a trade in the opposite direction.

$1.000.000 forex Challenge results