Mastering the basics of exchange trading is the most important stage in the formation of any player, and the mistakes of the trader at the beginning are an inevitable reality. Nevertheless, some of them are the same “rake”, which is better not to step on. What is worth considering, entering the world of exchange trading, for every novice trader?
1) You should not enter the auction at the moment of their beginning when the situation is difficult to predict
With experience, the main thing is acquired – an intuitive understanding of the direction of market movement. But at the initial stage, the risk of making a mistake is too great. So, the risk of losing everything in the first hours of bidding is incredibly high. For a novice trader, the emotional component is too great and always prevails over the mind. That is why it is necessary to give the market the opportunity to stabilize, having waited “troubled times” for the start of trading, and only then can you enter into trading.
2) The rush to profit is the main problem of novice traders
Seeing the clear profitability of the transaction, the trader closes it, fearing to lose more than can be acquired over time and … it turns out to be wrong. The ability to distinguish climbing trends from short-term growth comes with experience. At first, you need to pay more attention to the use of a stop-loss order in return for completely closing the deal and taking profit. This will allow you to gain time and provide an opportunity to determine the direction of market trends, which in the end will become the basis for making the right decision.
3) An attempt to build up a position when the deal is already going the wrong way
That is, by acquiring assets in a falling market, you will only double the losses. There are no miracles, and without objective reasons, no transaction will turn from a loss-making to a profitable one.
4) Active actions at a time when you are not sure of your own rightness
That is, one must act according to the rule: all doubts are not interpreted in favor of the action. Unsure of the profitability of the planned transaction – discard it.
5) Attempts to re-enter bidding immediately after the loss of assets
Haste and excessive emotionality are the main enemies of the trader. At the moment of resentment at the loss, you are not able to control emotions, and stock trading requires a cold mind and a mathematical approach. Only very experienced traders who can set the trend can play the “intuition”.
For more information on how to reduce risks, read the article “10 ways to manage risks on Forex.”
6) The desire to fix profits at the time of market reversal in the presence of open losing trades in the asset of the trader
If the market trend undergoes a sharp change, first of all, close unprofitable trades prone to collapse and only then take profits and exit the game (in some cases it is worth tracking trends – often profitable trades can again show growth after some time). Otherwise, the number of losses can become catastrophic and completely levels the profit received.
7) Opening a position for no reason
To give preference to certain positions without objective reasons, on the basis of certain “sympathies”, is an unacceptable miscalculation and an inevitable problem for every novice trader. Even if the deal really deserves attention and is “raised” from scratch – be objective.
8) Closing a transaction ahead of time.
Premature closing of the transaction on an opening day, if it is possible to extend it, is another significant miscalculation. Patience and a sound approach make making a profit more real, and most importantly – a profitable business.
9) Act bypassing the trading system
Do not change your trading rules for one transaction. Even the most profitable long-term trend requires careful monitoring of the situation. And if you use short-term strategies for transactions – give the price the maximum possible chance of growth within these terms, without extending them indefinitely. Otherwise, sooner or later, you simply get confused in multi-term trading situations and lose control over them.
10) Do not open many positions at once
Using continuous trading systems, one should not forget that the signal to close a deal should always precede the opening of a new one. And he must dominate. Make a rule: first closed a position, then opened a new one. This will save you from unevidenced miscalculations and losses in the future.
11) Do not open a demo account
Refusal to open a demo account and generally lack practice before starting work in a trading platform is a miscalculation that could provoke a catastrophe. It is the lack of experience that leads traders-dropouts to the fact that they lose all invested funds quickly and irretrievably.
12) Trade “on a boom.”
Another common mistake is “booming” trading, without a trading plan or any strategy at all. The world of stock trading only at first glance resembles a casino. Random “winnings” are very rare here. All other ways to profit from exchange trading are based on systematic and systematic work, strict adherence to the intended trading plan and a host of other factors that are quite significant.
You can learn more about creating your own trading strategy in the article “Forex. Development of a trading strategy.”
13) Increase leverage
Craving for borrowed funds, leverage is another miscalculation of a novice trader. Learn to rely on your own funds and strengths, do not resort to lending until you gain experience – the most valuable investment object that can be found in the world of big money.
More about using leverage in the article Using Leverage in the Forex Market.
Of course, the mistakes of the trader in each case can have a much greater variety. But even just following all of the above can reduce risks in the process of conducting trading operations at times. And the most valuable experience gained by generations of traders is worth adopting at least some of its particles. Just so that later it would not be excruciatingly painful for wasted nerve cells and money. Be careful and consistent, do not rely on luck, and everything will work out.
If you are still thinking about Forex trading and have not had time to choose a suitable broker company, visit the “Brokers rating” section, where you can compare brokers by various criteria and analyze the proposed trading conditions.