There is nothing more exciting to an investor than trading in the foreign exchange market. Sure the risks are big, but the possibility rewards are even bigger. Forex trades have become even more fashionable as Internet trading allows almost anyone to participate in the market. This certainly has its advantages as beginner traders can enter with just $500. The problem is, because of the considerably “low” initiate, some investors are losing their hard cash as soon as they put it in.

 So what exactly makes 70% of investors lose their cash in Forex trades? Here are 5 of the largest mistakes every foreign exchange trader SHOULD avoid:

 1 – Not having stop loss orders

If you don’t know what stop loss orders are, you’re plainly in for trouble. A stop loss order gives you precisely what its name says. As soon as you have lost a certain amount in a trade, your broker sells that security out. It’s like an automatic parachute that saves you from a fatal fall. Some individuals even so, forget about this safety net and choose to take the plunge anyway although they could’ve avoided it. Not having a stop loss order may make you feel like you’re a savvy investor, but when the currencies are down, so will your money be.

2 – Waiting it out

When you recognize that one of your forex trades are losing money, get out of it. Some tend to wait it out, hoping against hope that their cash can recover and still go up. The thing is, there are two items that could happen, either it does rise back to the original amount, or it goes deep down until you lose everything. If you notice that you've made a slip-up in a trade, don’t wait it out. Take quick action and trade again.

 3 – Having too much leverage

Leverage can be an investor’s best friend. Fundamentally, you can make money although you have very little money. The issue is, some traders use too much leverage. If you simply have a tiny account balance, don’t go into the large trades. If the market moves against your situation even by a fraction of an inch, it could mean large losses for you.

4 – Over trading

Beginner investors tend to get so excited that they look for any excuse to sell. They look for trading opportunities even when they know it's not there. What happens here is that they take in too many trades immediately, and use too much margin.

 5 – Trading one too many pairs

Some beginner traders also lack focus. They trade one currency to another, thinking that the more trades they have, the more chances they can win. For a beginner investor, the best thing to do is center on one currency pair. Once you have got that down pat, that's when you move on and find out about other pairings. Studying one pair individually can make you better to finding trends, and it’s simpler to keep abreast with the news.

 In Forex trades mistakes are normal. In the end, it is not easy spotting worldwide trends which not even professionals can control. Other individuals have made these mistakes time and time again, but yet they don’t learn. So take heed of these mistakes and do the reverse, you’ll be on that road to success quicker than you think.