Trading Invalid Data:
You need to use data that can help you calculate the odds and that means using enough data to allow you to do this. This is common sense, yet a huge number of novice traders still try day trading, it doesn’t work Period.
Predicting Without Confirmation:
Perhaps the most common mistake of all – novice traders simply love predicting but this is really relying on hope or guessing and in any money making venture, if you rely on hope you will lose. For example, instead of buying a dip to support and hoping it holds, you need to see prices turn up and CONFIRM support has held before executing your trading signal.
Not Buying Breakout:
Most traders are obsessed with “buying low and selling high”. If they see prices breakout above a new high, they want to wait for a pullback to get on board. Generally when prices break to the upside above strong previous resistance, they don’t pull back. You need to learn to buy breakouts if you want to catch the best trends due to this fact: Most major trends start from new market highs - NOT market lows. So if you don’t buy breakouts you are missing out on the best potential trading opportunities. “Buy high sell higher” is the key so remember it.
Not Being Objective:
If you are too subjective your opinions get involved and so do your emotions so try and stay objective. Avoid indicators that involve too much subjectivity, such as Elliot wave, cycles or any other indicator that is not objective.
Using Indicators Incorrect:
A good example would be the huge amount of traders who buy dips to moving averages – It’s a lagging indicator! Or buy and sell the outer Bollinger bands – it’s a volatility indicator! Neither should be used to enter trades on their own.
Using To Many Indicators and Curve Fitting:
If you use too many indicators in your Forex charts to generate trading signals you will lose. In forex technical analysis simple systems work best, as there are fewer elements to break in the brutal ever changing market. Less is more when using indicators and devising your forex trading system.
The above are all common errors when using forex charts and if you make any of them you will lose so make sure you avoid them.
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