One of the most dreaded qualities in Forex trading is that of overtrading. The individual tends to rely on many poorly planned trades in order to reap profits when in fact fewer well skilled trades are often the best option in the Forex market. Yet, there is also the risk of what may be referred to as Forex undertrading.
Forex undertrading can jokingly be referred to as the ugly step-sister of overtrading, but the reality is that this is no laughing matter. Those who are excessively fearful of incurring a loss rather than a profit are highly likely to be exposed to the dangers of Forex undertrading. Not surprisingly, it is sometimes a quality of human nature to be hesitant when facing grave decision-making tasks. Circumstances produced in the Forex market context forces us to go against our human nature and make decisions even if risks are involved.
How to overcome Forex undertrading?
There are some helpful methods that may assist in overcoming Forex undertrading. For instance, some people have recommended to create two accounts in which one is a demo account while the other is a live account. Of course, the demo account will present the same exact trades as the live account, but it will also be a safe place to list additional trades which you may not have been confident to pursue in the live account. The creation of two almost parallel accounts allows those experiencing Forex undertrading to realize their potential. Realizing ones trading potential is a key step towards overcoming the pitfalls of Forex undertrading.
Understanding your trading strengths can easily be the first step towards improving your results in Forex trading. Forex undertrading often is triggered when there have been significant losses either as a beginner or later on with a poorly strategized trade. Once the self-doubt begins, then it is likely that the trader will try to avoid any and all possible losses. Losses are almost a part of life in Forex trading, as well as profits.
Forex undertrading can be avoided when one is confident in their ability to analyze the market with the help of Forex market indicators or otherwise. Preparation is one of the best methods of avoiding disappointment. When in doubt, the best method of approach is to research strategies, techniques and methods online or participate in a blog to see how other traders handle the Forex pressure.