Undercapitalization and Overtrading

Undercapitalization is a common problem of neophytes in Forex Trading. Although there are mini accounts, which make currency trading accessible to all, nevertheless, the minimum deposit can only give you minimal profits as compared to those with higher capital. In establishing your own enterprise, the higher the capital, the more opportunities to procreate the business; similar in currency trading, higher the deposit bears more opportunities to trade.

This is not to discourage but rather to encourage traders to study about proper money management. The game plan in currency trading is to earn profit and avoid losses. At the earliest opportune, you have to identify the technique in trading that is really working on you and stick on that plot. If you happened to make a bad trade, then you have to wait and strategically plan your move to regain your losses and simultaneously earn.

On the other side, overtrading is an act of too much trading to attain the target profit. Many traders, without them realizing it, are guilty of this act. For beginners, as they try to explore the trading processes they tend to be excited and without them knowing it, they already made three trades rather than one. Also, as traders get used to their technique, they continually do the same strategy without updating on the current status of the market; for all they know, the market already runs against their favour.

Indeed, the act of trading is the best way to hone your trading skill. However, success in Forex Trading does not depend on the number of trades you made but instead on your intelligent decision in trading.