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4 mistakes associated with precious metal trading

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The precious metal trading industry is sophisticated in nature. You must follow the standard protocols or else it will be tough to make money in trading. The majority of retail traders are making money since they know the proper way to trade precious metal. They never take a high risk since they focus on the simple nature of the market. To become good at precious metal trading, you have to avoid the most common mistakes. Sadly, the majority of the UK traders don’t know how to trade precious metal. They take the leap of aggression and lose money.


Avoiding the losing trades and learning from the common mistakes made in precious metal trading is very easy. Let’s learn the top 4 mistakes which we can avoid by using a simple technique.


Avoiding the high impact news

People don’t really understand the importance of major news in precious metal trading. Let’s say you are trading the gold. You have executed long orders in the gold right before the FED interest rate decision. If the FED hike their interest rate, the price of gold will drop to a great extent. Since gold is valued in the U.S dollar, a slight change in the U. S dollar index significantly impacts the gold market. Due to the FED rate hike decision, the green bucks gain more strength. Thus, the price of gold drops.

So, it’s obvious you would have lost money in gold trading. But this is not as simple as it seems. You have to be cautious about the news factors and only then you will be able to execute high-quality trades. Though it might seem easy to analyze the news, you must spend some time. Once you learn to analyze the news, you will be able to execute high-quality trades without having any problem.


Avoiding the trend

You need to stick to the trend trading method and only then you can earn money at CFD trading. Taking trades against the major trend and trying to win money from most of the trades is a very big mistake. Be careful about the trend line tools. When you draw the trend line in the asset, use the higher time frame. By using the higher time frame, you will be able to execute quality trades. If you draw the trend line in the lower time frame, you might be trading the retracement. The minimum time frame is 4 hours, in order to draw the trend lines. If necessary, you can use the 100 days SMA to find the direction of the trend. But no matter what, you should not execute a trade against the major trend.


Stop taking a high risk

Thousands of traders are trading precious metals with high risk. They trade with high risk since they think it is the only way by which they can make big profits. Think about the safety of your trading capital. If you impose a high risk to your trading method, you won’t be able to recover the losses. In fact, the stress associated with trading will be much higher. Think about the safety of your trading capital and focus on long term goals. The minimum risk to reward ratio for the trades needs to 1:2 or less you should not take the trade. In a nutshell, focus on the risk management technique.


Trading with emotion

Rookies always get emotional while trading precious metals. They think trading with emotion is a great way to earn more money. But you have to be careful about the trade execution model. If you ever trade with emotion, you will be losing a big sum of money. Never take too much risk because it can ruin your performance. Go slowly and try to trade with discipline. Tame your emotion so that you can make a consistent profit from this market.

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