Making mistakes is quite natural for humans. But when you keep repeating mistakes again and again, then that could be a problem for you. As trading is a profession where risk is always at a high level, if you make mistakes once or keep repeating mistakes then it will be a big problem for you. So before joining the trading industry you just need to have a good idea about trading before starting to trade. Many new traders who have just joined the trading industry often make some common mistakes. In this article we are going to talk about that common mistakes which a beginner trader makes so that you might avoid to make them.
Lack of preparation
Most people get introduced to this industry by watching ads on the internet and where most of the ads giving him the idea that trading is nothing but a child’s play, It gives him a signal that he can earn a lot in a very short time. As a result, these people become interested in trading because of the amount they think they can earn from here. Because of that, they do not give enough time to learn about the trading market rather than just invest money to start trading and blow their accounts. Often they just go through some articles and gather information about trading tools which they should follow to make a trading decision. They might earn some money with that much of knowledge but in the long run, he will lose all of his trading balance. So is someone is thinking about joining the trading industry then they need to take the time to learn about this market properly before starting to trade.
Absence of proper stops
Often new traders don’t like to add stop loss level because they have less experience with this market. They think that they will stay informed of the trading desk until the trade gives him perfect result and will close it manually if something goes wrong. This is one of the biggest mistakes of a trader because this market is so volatile that it can change his direction and make big moves with just a blink on an eye. Sometimes even after using stop loss your platform will not able to close the position in your stop loss level. So I hope you can now understand that how not using stop loss can lead you to trouble and might even blow your account within a few seconds. Try to read some professional articles from Saxo to enhance your knowledge. Look at this site and you will get many premium articles.
Using a poor risk-reward ratio
Often new traders say that they are using proper risk-reward ratio but still, they are facing loss. The reason behind this is that they might not be giving a trade enough space to breathe before it can give him a result. It is true that you need to follow a positive risk-reward ratio but using tight stop loss will not give you any positive result. So you need to consider if you can use the risk-reward ratio by which a trade can take a breath before giving you a potential profit. Your analysis can be right but if your trade is closed before it goes in your favor then the best trading strategy in the world will not give you a profitable result.
Overtrading is another common problem of traders because when they learn about this market and join the market then they see that every minute. They try to take all the opportunities to earn money if he can understand then market. So for earning more he starts to open more trades than his account can handle and because of them all though he do some profits the losing trades takes away his all profits. So don’t try to over trade and fix an amount of trade that you might keep open at a time and if it fulfilled then do not open any more trade till you close one.
If you are a beginner trader then try to avoid these mistakes so that you can make the most from your trading career.