Hey hey, what's up my friend, so in today's episode i want to share with you five five top five forex trading mistakes. To avoid okay number one you are trying to make. You know x, number of pips a day. For example.

Let's say you know each day you want to make 10 pips trading euro dollar. After all, you might think that right now, that's a really realistic goal. I'm just trying to make 10 pips a day on euro dollar. Euro dollar makes an average of 100 pips a day.

All i'm asking is just to extract 10 pips, that's pretty reasonable! Now, here's the thing. I don't care, whether you're trying to make five pips 10 pips or 20 pips a day. Here's the thing the market is not your atm. Let me repeat once again: the market is not your atm.

The market is not your atm. The market is not your atm. What this means is that there's no way right, you are going to consistently every single day. Pull up 10 pips from the market, even though it sounds reasonable.

Why is that? And the reason is simple: is that markets always changing? It can be in an uptrend. It goes down to a downtrend range market, low volatility, environment, high volatility, environment et cetera. It's always changing, and your trading strategy is only meant to exploit certain patterns in the market when market conditions change your strategy either has to adapt to it all right, or you know, you've got to you know, tweak your strategy for different market conditions. So if you agree that market conditions change and if you agree that your trading strategy cannot profit in all different market conditions, then trying to make x number of pips every single day clearly isn't realistic.

Okay, so, for example, let me give you an example. Let's say you're trying to make 10 pips a day, maybe for the last five days right you, euro dollar, is in the uptrend. You managed to make 10 pips over the last five days on the sixth trading day. Right again, let's say you're bullish right.

You try to get 10 pips, but what happened is that euro dollar had a sudden sell-off. Now, instead of you know, profiting 10 pips right, you got caught off guard and you are down 100 pips. So when you lose that 100 pips right, you will realize that over the last five days, those 10 pips that you have made over the last five days is not enough to cover your losses. Okay, so this is just one extreme example, but you kind of get my point is that when market conditions change right and you're not prepared for it right, you will lose right and this will happen pretty regularly, so be prepared for it and don't go into fx Trading with the mindset you know i'm going to make a consistent pips every day, no matter how reasonable it seems, no matter how reasonable your expectations are.

Trust me right trying to make money every single day from the market trying to treat the market as your atm is not reasonable at all number two, you don't understand leverage, so forex trading is one of the few instruments out there that you must use leverage right To make a profit, because the fx markets right the volatility of most currency pairs, they are very low. So this is why you need to let use leverage to amplify your returns and it's not like stock trading. You know where the stock you know goes up. Two percent three percent right: you can, you know, make some money of it right.

If you, you have a lot of your money. Uh allocated to that one stock in fx right you've got to use leverage to amplify those returns, but the thing with leverage is that it comes with risk and reward. So if you don't understand how to trade with leverage, if you don't understand position sizing right, you might actually lose your account a lot faster than you expect it's not like stocks. Where you know, let's say you have a hundred thousand dollars.

You buy one stock for you to lose that hundred thousand dollars on that one stock. Then stock has to go to zero, but when you're trading forex and you have a hundred thousand dollar account - and let's say you leverage uh one to fifty leverage or one to a hundred leverage, you can wipe out that hundred thousand dollars account in a much faster Duration, that currency doesn't have to go to zero, maybe just drop like 10 20 and you could be wiped out depending how much leverage you use. So you must understand leverage if you're the type of forex trader that have blown up multiple trading accounts. You don't understand why your losses are so huge.

You can't contain it it's because of leverage. It's because you don't understand it so go and master it. It's not difficult. It's just simple: math understand position, sizing risk management, leverage how it all comes together, and i can assure you that this is one of the best uh investment in your trading that you can make, because you will stop.

You know, blowing up accounts unnecessarily. Okay! Next one! You treat all currency pairs, the same man and i mean right. I am one of those traders as well. In the past.

I used to think that you know hey, you know, uh, all the markets out there, whether it's stocks, forex bonds, futures whatever they all train 30 of the time remaining 70 of the time they are in a range. And then i came across the work of andrea unger and i got proven wrong and i learned something new uh. Actually, what i learned from him is that different currency pairs, they have different characteristics. Some currency pairs have more of a trending behavior momentum behavior.

Whenever the price, you know, let's say it, breaks out of the previous day high, there tends to be a follow-through. One example is poundian and, on the other hand, right there are currency pairs with a mean, reversing behavior. What this means is that, whenever the this currency pair, you know uh trades above the previous day high, they don't have follow through. They tend to reverse from there and one example of this currency pair is aussie canadian.

So the bottom line is different currency pairs. They have different behavior, different statistical, behavior, okay and it's your job, your duty, to kind of find out. You know which are the ones which are having a momentum, behavior and one with a mean, reverting behavior, but it's out there, okay. So this just uh heads up to you that you know if you realize that why do you tend to make money on certain currency pairs, you tend to lose money in certain currency.

Pairs is probably because right, you're treating all currency pairs the same, and that shouldn't be the case next one number four, you ignore exotic currency pairs. Maybe you think that oh man dollar, against the the uh african ram right. That sounds really exotic right. You don't trade! It dollar against the norwegian chrono that sounds exotic.

Let's not, let's stay away from it right. So here's the thing right. When you trade exotic pairs, there are more trading opportunities right and some of these pairs they could tend to trend really well like, for example, dollar against the turkish lira is trending pretty well a dollar against the chinese yuan. From time to time, you get very nice trends on it as well.

So don't just you know, fix it on the major currency price, that's what the whole world is looking at. That's what everybody looks at because it's a it's a high liquidity, low spread, yada yada. But if you look at exotic currency pairs as part of your watch list right you'll find that you have more trading opportunities but bear in mind right exotic currency pairs. They tend to have a wider spread because they're not as liquid.

So if you are going to day trading short term swing trading, i would recommend avoiding those exotic currency pairs, because the transaction costs will kill you. But if you are like a longer term trader you trade off the daily chart, the weekly chart, then hey you can look at this exotic currency pairs as another way to uh. You know get more trading opportunities, okay, so don't ignore them. And finally, right, the fifth mistake right that many forex traders make is that they think that forex is the only markets out there and that couldn't be further from the truth.

Right, forex is only one category of markets: you've got stocks, you've got etfs, you've got so many different types of markets out there. So for a long time right, i also you know, i focus primarily on forex at the start and then realize man. There are stocks that ets right and i start branching out - you know into these different markets with more trading opportunities and now with different trading strategies to trade, these different markets and guess what right the returns on my portfolio. The returns got smoother over time because i'm trading more markets with different trading strategies for different markets and here's the thing right just because a particular strategy work in the fx market doesn't mean that it's going to work in the stock market, for example.

Right not always the case, for example, a mean reversion trading strategy might work really well in the stock markets where you buy pullbacks and sell really, but that might not work in the fx market because they have, you know different behavior to it. So again, it's your job as a trader to to go and learn and find out more and don't you know, subject yourself just to the fx markets, there's really a world of trading opportunities out there, a lot of other markets. You can trade with different strategies, so open up your mind right and you know, get exposed and to soak up all you can okay. So with that said, i have come to the end of today's episode.

I wish you good luck and good trading and i will talk to you soon. You.