Foreign exchange trading has attracted a large number of novice investors with its high liquidity and potential high returns, but many people are prone to making common mistakes when entering the market, resulting in significant losses. Understanding these misconceptions and avoiding them is the key to success.

1. Blindly pursuing high leverage

High leverage can amplify returns, but it can also amplify risks. Newcomers are often attracted by high leverage and overlook its potential risk of liquidation. It is crucial to set a reasonable leverage ratio and trade based on one's own risk tolerance.

2. Neglecting risk management

Many beginners ignore stop loss and take profit settings when trading, believing that the market will develop in a favorable direction. However, market volatility is unpredictable, and reasonable stop loss and take profit settings can effectively protect funds.

3. Lack of trading plan

Not having a clear trading plan is a common mistake for beginners. Developing clear trading objectives and strategies, including entry points, exit points, and fund management strategies, can effectively avoid blind operations.

4. Over trading

Frequent trading due to excitement or a desire for quick profits can increase costs and risks. Stay calm, follow your trading strategy, and avoid making impulsive decisions due to short-term fluctuations.

5. Neglecting the combination of basic and technical analysis

Relying solely on technology or fundamental analysis may lead to misjudgment. Combining the two can provide a more comprehensive understanding of market dynamics.

6. Neglecting fund management

A reasonable fund management strategy is the foundation of successful trading. Avoid concentrating too much funds in a few transactions to reduce risk.

7. Emotional trading

Emotional decision-making often leads to significant losses. Successful traders are able to remain calm and avoid emotional reactions due to market fluctuations.

8. Overreliance on automated trading systems

Although automated systems have improved efficiency, they cannot completely replace manual decision-making. Investors should adjust according to market conditions and maintain their judgment.

9. Neglecting the economic calendar and important news events

The foreign exchange market is sensitive to macroeconomic data and news events, and beginners should closely monitor this information to adjust trading strategies and avoid unnecessary trading during high-risk periods.