Common MistakesThe Five Mistakes A Trader Should Never Make
Do you want to trade profitably? Then be careful, not to make the following mistakes! So it is useful to know what the common mistakes are, how to avoid them, and get start on the right foot.
Most novice and not-novice traders make mostly mistakes due to emotional factors or for an incorrect planning of their operational activities. Below I am going to describe the five most common mistakes for a trader:
No strategy o Not following a strategy
Not having a strategy is the typical mistake of the beginner who starts to trade with a certain superficiality. The novice trader after viewing some videos or reading some news decides to operate live, without going through any testing phase. This approach is the worst for anyone approaching the industry because he completely underestimates the job.
Another less fundamental but also inevitable mistake frequently made is not respecting the strategy planned in the pre-trading phase. This mistake mostly happens due to emotional reasons when the trader is losing and tries to recover by changing his strategy during the trading session.
When a trade is going in the wrong direction, some traders tend to "halve" which is opening other subsequent trades in order to reduce the amount of exposure load, but this type of behavior is (almost) never a strategy, it is the worst mistake which a trader can make, as it "clings" to the false hope that the trade will move in the direction hoped for. Attention about points of entry and iron discipline are prerequisites for a trader.
It is one of the worst ways to reset the account in a short time. The martingale consists of consecutively double the amount of a position every time it goes at a loss until the recovery of the total loss. This means that if it happens that several trades are lost consecutively, the amount involved will be increased exponentially endangering our whole capital. Although for many people it may seem very unlikely, losing 6, 7 or 8 consecutively trades, it can happen very often and the first time it happens we can lose all our money.
It is one of the main causes of losses for a trader. The main reason is the desire to operate in all circumstances, forcing the operation, bringing the traders in overtrading that is, going on to operate beyond the normal working hours. A useful tip is to select the best operations, follow one single operation at one time, especially if made on short terms and respect a maximum number of operations or work schedules that you have programmed.
Trading on prices and not on assets
It often happens that traders forget to be investors even if their style of trading is short-term, they should at least be informed about the asset fundamentals. The market is made of big players such as investment funds and investment banks, which give directions to securities and currencies, therefore, knowing their "opinions" allows traders to be in tune with market trends.
Just because it is not enough having a good strategy in order to be profitable, the trader should avoid making the above mentioned mistakes, because that could jeopardize not only his economic value, but also the psychological one and especially the second one in some cases is worth much more than the first.