In this article, we will discuss the mistakes traders make. The most important thing every trader should know is that mistakes are an integral part of every active person’s life. No one is safe from mistakes, and they happen to everybody, no matter if you are a professional trader or a beginner. So let’s talk about what you should always keep in mind.
Today, most mistakes in the market occur because traders do not stick to basic or tactical rules. They make mistakes when they lack basic knowledge of market processes. Quite often the beginners just trade at random without using any trading strategy. As a result, they fail. But even if you started on a winning streak, it’s only a matter of time before your intuition fails you.
Therefore, to learn how to trade properly, every new user should know that trading starts with learning. Trading arbitrage inevitably leads to losses. The first thing to learn is the structure of the market and the laws it lives by. Pay attention to the trading participants, understand who the market makers are and how they influence the market. In addition, the psychological aspect also plays an important role. Knowing how to understand the psychology of people will help you avoid being swayed by emotions and stay out of the game when bigger players trap smaller speculators. Also, never forget that it’s up to you whether you want to be a hobbyist or a professional trader. It all depends on the extent of your knowledge and professional training.
Actually, before going for real money, every conscious trader will practice time and effort on a demo or cent account. Firstly, it is necessary to find out whether the trading strategy works or not, and secondly, to test themselves, their patience, and endurance. The market reveals both good and bad traits of a person. We are talking about negative traits: greed and fear. The urge to gain super-profits turns into uncontrolled greed blocking rationality, and as a result, a trader overstays his/her trade, being in it more than necessary. Fearing losing everything, the trader rushes out of the market without waiting until the price returns to the positive mark. Making a rule list allows a trader to establish a few dozens of basic principles for themselves. Keep in mind that making a list is only part of the business, each point needs to be followed later on. Refer back to the rules before each trade, during each financial day, until they become an integral part of your skills.
The most common mistake novice traders make is trading without a goal. Most of the trade is solely for the process itself and not for the result. Any trader must remember that setting a goal is a huge part of the way to success. Before you open a trade you need to know at what point you will exit it. You should have two action plans in mind: what you will do if you succeed and what you will do if you fail. In this case, stop loss and take profit are ideal. These figures are your extreme positions, and you should not move them in any way.
However, as you can see, these rules are simple, yet so necessary for successful trading. By sticking to them, you will increase your chances of success by an order of magnitude. After all, discipline combined with a trading strategy ensures success in the market.
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Tatiana Leveria, Team bit4you