- Misplacing Stops
Stops are necessary to avoid bad losses, however poorly placed stops can be just as bad. Before placing a trade the trader should consider the risk to reward ratio for the trade. The stop needs to be set with the traders money management in mind and should not be too close or too far away from the price. Traders should also consider moving their stop as the trade goes in their favor to lock in profits and reduce potential losses.

- Abusing Leverage
With Forex brokers offering up to 400:1 leverage, it’s easy for inexperienced traders to get carried away with the hope of making quick profits. When traders use a high level of leverage the returns can be astounding, but when the trade doesn’t work out the result can be catastrophic. Traders should always calculate the dollar value of the risk they are taking for each trade and ensure that this is appropriate for their account balance. Experienced traders rarely risk more than 2-3% of their account balance on any one trade.

- Placing Technicals On A Pedestal
Technical indicators are great tools that assist traders to make decisions. However making decisions for trades based solely on what the technical indicators are telling us can result in large losses. By considering fundamental information together with technical information you will have a much better chance at being successful.

- Day Trading
There are successful day traders out there. However, for new traders, trading with the longer term trend will be easier and have a better chance of making profits. Longer duration trades give the position more time to move in your favor, particularly if the market is volatile.

- Blindly Following A System
There are a lot of Forex systems out there that promise miraculous results. But if you start trading one of these systems without proof that it actually works you could find your account balance quickly reduced to 0. If you want to use a Forex trading system, a sensible approach is to backtest and forward test it using software or on paper before putting any real money at risk.

- Underestimating Emotions
Emotions can have a huge impact on your Forex trading. Keeping a trade diary will help you to understand how your emotions are affecting your trading, you can then learn to use them to your advantage.

- I Backtested It So It Must Work
A mistake traders make is to assume a backtested system will continue to work. Forex markets are constantly changing and are effected by global and political events. Before you begin to use a backtested system you should consider if it reasonable to assume that the market conditions the system has been tested on are likely to be similar to market conditions in the future.

Hopefully this article has given you some tips on how to avoid common Forex trading mistakes.

No form of investment is guaranteed to make money and Forex is not an exception. As a matter of fact due to the amount of leverage available to traders and investors in the Forex market, greed can easily take over and all commonsense is thrown out the window. Experienced investors and Forex traders realize that some of their trades, even up to half of their trades, will lose money. The reason why they are successful is that they have a good money management plan so when they do lose, it doesn’t wipe out their portfolio.

In any Forex trading method, there will be a drawdown. The problem is, we don’t know when the drawdown will begin. If a Forex trading method proves it is 80% successful, that means approximately 20 out of every 100 trades won’t be successful. If those 20 trades all happened in a row (yes, it can happen!) your account could be completely wiped out if you are not using sensible money management and you wouldn’t be able to keep trading the method for the next 80 potentially profitable trades.

Some aggressive Forex traders argue that the best way to accumulate huge profits rapidly is to risk more of your money. While this may be true, it is also the fastest way to lose all your money and should really be thought of as gambling. There are many stories out there of those that made their first million trading Forex and then lost it. The most successful Forex traders and investors did not become rich fast, they took a slow and steady attitude and learnt to generate money trading Forex for the long-term.

An experienced Forex trader only risks a limited percentage of their investment money on each trade. The profits will not be as large as those of the aggressive trader, but when the drawdown comes, the Forex trader practicing sensible money management will be more prepared to survive the storm.

Sure, building up capital slowly is not an exciting plan. But, you’re in the Forex market to make consistent profits, not for the excitement. If you’re not using sensible money management when investing and trading the Forex market, you are downright gambling. Even professionals that make their living playing poker and other casino games use some sort of money management method. They realize that they can’t win every single tournament or game they enter, so they only risk a limited percentage of their bankroll on each one. This allows them to bounce back much more quickly when a losing run hits.

In conclusion, don’t allow the promise of making money rapidly let all commonsense be dismissed. Trading Forex is not a way to get rich rapidly, it’s an investment option that can make consistent profits for those who practice sensible money management.

Forex Made Easy is a book written by James Dicks, the full title of the book is Forex Made Easy : 6 Ways to Trade the Dollar and was published in 2004. The book contains a lot of useful information for beginner traders, including basic information on setting up a workstation for trading, technical analysis, advanced indicators, Fibonacci sequences, Elliot Wave, money management and how to place trades. At Amazon the book achieves an average rating of 2 1/2 stars, but this ranking seems to be split between very high ratings and very low ratings. In fact 25% of customers to date have given the book a rating of 5 stars, the highest rating possible. The most satisfied customers appear to be beginners who appreciate the basics the book goes through without being overwhelmed with information.

Forex Made Easy is also a software program for trading forex. The title of the software is 4X Made Easy, the 4X being a play on the word forex. The software is produced by GlobalTec Solutions, LLP and is available through the website 4x.wizetrade.com. The company frequently attends forex trading expo’s and conducts free workshops, if you are interested in this software attending one of these is a good way to see the software in action.

The company claims that the software offers; research, a trading platform and a training system. The software provides green and red lights to help determine potential entry/exit signals for any currency pair.

Bad reviews for the software seem to outnumber good ones 10 to 1 on any review site. Many users complain that obtaining a refund was difficult, or impossible due to some fine print they hadn’t read. Others complain about the additional monthly costs you are forced to pay in order for the software to function. Satisfied users seem to point out that it isn’t really forex made easy, it can take a long time to learn to use the system and if you’re looking for an easy way to make money this isn’t it.

The best advise I can give on this software is to read the reviews. If you decide to purchase, make sure you read the fine print so you can claim a refund if you’re not happy. Remember Forex Made Easy stands for 4X Made Easy.