10 mistakes of novice traders on the way to success
Financial markets offer traders great chances for unlimited earnings. But both beginners and professionals often make critical mistakes that cost them very dearly. Knowing about them in advance, even novice traders can avoid common mistakes in stock trading, which will allow them to achieve success faster.
1. Choosing an unreliable platform
By giving preference to the wrong platform, the trader takes a lot of risks. A reliable platform should contain educational and information resources, have a user-friendly interface, various trading signals, and provide access to major currency pairs and other financial instruments.
2. Trading without preparation and strategy
Perhaps the most dangerous mistake of a trader is when the latter trades, as they say, blindly. Such behavior quickly leads to the loss of invested funds. Therefore, before opening a position, it is necessary to analyze the market, choose an acceptable strategy for yourself and make at least an approximate plan of action.
3. Excessive self-confidence
The problem of traders who, after the first successful transaction, believe that it is easy to make money in this way on any asset. In fact, each individual position requires a thorough analysis. The other side of the problem is excessive trust in someone else’s opinion. Even if this is an expert opinion, you should not trust him unconditionally. Professionals also make mistakes, so a trader should approach any situation with a “cold” head.
4. Trading with a poor risk-to-profit ratio
When a trader is “carried away”, and the fact of being on the market prevails over the ability to analyze, the risk of making unprofitable transactions increases. Let you open fewer positions, but with the confidence that each of them will bring profit rather than possible losses with a high degree of risk, in the event of a market reversal not in your favor.
5. Unwillingness to fix losses
It’s about the ability to stop in time. In such situations, there is a risk of going into negative territory, so if you see that a downtrend prevails in the market and there are no prerequisites for its change, it is advisable to fix a loss and open a position again at a favorable moment.
6. Ignoring the trend
The prevailing trend in the market is a faithful companion of the trader, ignoring which often leads to the opening of obviously unprofitable positions. Remember: you can earn not only on growth, but also on falling prices.
7. Excitement and lack of control over emotions
Азарт, равно как безразличие к тому, что ты делаешь – плохие помощники для трейдера. В обоих случаях вы необоснованно рискуете, забывая, что биржа – это не казино и что к торгам нужно приступать подготовленным. Успешный участник рынка всегда спокоен, подготовлен и хорошо выспался.
8. “Favorite” promotions
Focusing on familiar assets often leads to the omission of equally promising options. The profit from investing in the latter may appear in the long term, so it makes sense to divide the capital between those assets that are profitable now and those that will bring considerable profit in the future.
9. Lack of accounting
Having trading records is the key to success. By keeping regular records, a trader can analyze his wins and losses in order to avoid losses in the future and deduce the ideal formula for success.
10. Use of borrowed funds
Using someone else’s money for trading creates a false idea of limitless possibilities, but, like any other, a loan opened by a broker will have to be returned. Experts recommend investing your own free funds, in no case trading with the last money and not succumb to the temptation to use insane leverage, for example, 1:2000.
Published: 31 December, 2022