This month on TorontoForex, we’ve covered everything from taxes and prop firms to gold, central banks and backtesting. To close out October, here are the mistakes I see new traders in Toronto make most often. Almost none of them are about strategy. They’re about habits, routine and mindset, and they’re all fixable.
1. Waking up and trading straight away
This is the one I see most. Someone wakes up, goes straight to the computer, sees a move, and places a trade before they’ve really taken in what the market is doing.
Look at the charts, sure. But don’t trade right away. Have breakfast. Make a coffee. Shower, stretch, maybe work out. Tune into the news and get a feel for what’s driving markets today. Then come back to the charts with a clear head.
A trade taken in the first five minutes of being awake is almost always a reaction, not a decision.
2. Trading without scenarios
When you do sit down, don’t look for a trade. Build a plan.
Plot the levels or areas of interest where you’d like to get in. Then map out scenarios:
- Scenario A: if price does this, I’ll do that
- Scenario B: if it does something else, here’s my plan
- Scenario C: if it does neither, I don’t trade
Put together trade plans around those scenarios, set alerts, and then be patient. If you’ve already decided what you’ll do in each case, you won’t have to improvise when price moves. We go into this approach in currency trading strategies for Toronto traders.
3. Trading to pay the bills
“I have to make money this week to pay rent.” That’s the wrong mindset, and it’s one of the most dangerous ones.
When you need a trade to work, you take setups you’d normally skip, hold losers longer, and size up to make it count. The market doesn’t care what your bills are. Keep trading money separate from money you need to live on, and go about your day like you normally would. Check in on your trades here and there, but don’t let your finances push you into the market. We cover this in more depth in trading psychology.
4. Forcing trades
If there are no trades, there are no trades.
Some days, nothing sets up the way your plan says it should. That isn’t a wasted day. It’s a day you didn’t lose money on a bad trade. New traders often feel that not trading means they’re not doing their job. Experienced traders know that waiting is the job.
5. Not letting trades develop
The opposite problem: you take a good trade, and then you can’t leave it alone. You close it at the first small profit, or panic out at the first small pullback.
Once a trade is in, manage it according to the plan, and let it develop. As we explained in risk-reward vs win rate, every trade starts as a scalp, and good management lets some of them grow into much bigger winners.
6. Sizing too big
Risk per trade is where most accounts are lost. New traders size based on how much they want to make rather than how much they can afford to lose. Size every trade from your stop loss, and keep risk per trade small. Our guide to margin calls and stop-outs shows how fast oversizing can end an account.
7. Stacking the same bet
Several trades that all depend on the same currency can turn modest risk into a big one. I’ve been caught by this myself, short the US dollar across several pairs without realizing how much exposure I’d built up. Track your exposure by currency, as we explain in currency correlation.
8. Trading through big news without a plan
Central bank decisions and major data releases bring fast moves, wide spreads and reversals. If you don’t have a specific plan for them, step aside. My own rule is to avoid trading a currency when its central bank is due to announce in the next day or two.
9. Skipping the foundation
Jumping straight to strategies from social media, before learning to read charts, understand what moves prices, and manage risk. Our beginner’s roadmap lays out the order that works.
10. Trusting the wrong people
Fake gurus, guaranteed returns, “account managers” on Instagram. If someone’s main business is showing off results, be careful. Our guide to forex scams in Canada covers the red flags.
A better morning routine
Putting it all together, here’s a routine that avoids most of these mistakes:
- Wake up. Don’t trade.
- Breakfast, coffee, shower, stretch or work out.
- Check the news and the economic calendar.
- Look at the charts, from the higher timeframes down.
- Plot your levels and areas of interest.
- Write scenarios A, B and C, and set alerts.
- Go about your day. Check in here and there.
- When an alert hits, decide calmly whether it still fits the plan.
- If nothing sets up, close the platform. Tomorrow’s another day.
The bottom line
Most beginner mistakes come from rushing: trading before you’re awake, trading because you need money, forcing setups, and cutting good trades short. Slow down, build scenarios, size small, and let trades develop. If there’s no trade, there’s no trade.
Thanks for reading along this month. Best of luck. Trade safe, and trade well.
Disclosure: The author, Mike Harding, founded Academy of Financial Markets in Toronto and teaches its mentorship program. This article is educational and is not financial advice. Trading foreign exchange carries a high level of risk and may not be suitable for all investors.