10 Trading Blunders to avoid if you wish to see yourself as a Successful Trader

JonnyPean

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Not enough preparation and poor judgment lead to the biggest trading blunders. While stepping into the trading market, you need to know where the traps are so that you don’t fall prey to them. If you wish to see yourself as a future successful trader, you have to steer clear of the most common mistakes that are committed by inexperienced (sometimes even by seasoned) traders. Traders who start earning money are the ones who learn from their mistakes.
Here in this post, we are going to discuss the top 10 blunders that traders commit. Read on and stay informed.
Mistake #1: Letting your emotions rule you during trading
Are you a trader who lets your emotions rule you during trading? If yes, you’re wrong as trading is not an emotional game. Your judgments may get clouded when your emotions are involved. Usually, beginners tend to follow a set pattern and when they lose money initially, they get emotional and lose even more. This is the primary reason why traders leverage robots to work on behalf of them. Make cold and predetermined decisions while trading.
Mistake #2: Over-leverage
There are several traders who have lost their total account balance due to a bad practice called overleveraging. Mostly it is greed that makes you unnecessarily add to your position size. When you do this and the trend moves against you, the losses that you incur hurt you badly. Most traders plan to make a killing in a single trade and this makes them over-leverage. You can’t forget that leverage is a double-edged sword where the cut will be sharper when the trend moves against you.
Mistake #3: Lacking a proper strategy for money management
The sole reason why beginners feel that trading is frustrating is that they don’t incorporate a money management strategy which is the business side of trading. It is through a money management strategy that you could know how to treat your capital. Just like any other business, trading should also be taken on a serious note. Plan building your accounts and know how much profit you should reinvest.
Mistake #4: Being in too many trades at the same time
The most common mistake committed by 100% of the beginners is that of participating in too many trades at the same time. If you find yourself to be trading at too many assets at the same time, know that you’re trading too much. Try and ignore the temptation to constantly keep trading as this will do more harm than good.
Mistake #5: Not using a demo account
Few forex traders take a plunge into live trading without trading through their demo account only to instantly lose money. They try to trade way before they’ve developed their trading skills. Demo account is more like a boot camp for forex traders as it offers you a risk-free way of practicing trading. Unless you get consistent profits on a demo account, don’t jump into live trading.
Mistake #6: Revenge trading
When you lose, you hate that feeling of loss! Don’t you feel like getting back to the market and taking one more trade to call yourself a winner? This is what you call revenge trading and this should be avoided at any cost. When you engage yourself in revenge trade, you’re not in your best emotional state and this is when you stop taking sound trading decisions. So, stay away from revenge trading!
Mistake #7: Purchasing stocks without any plan
There are several new traders who enter the trading business and wish that there will be an instant hike in the price whenever they ever. A seasoned trader will always know that this never happens in reality. The beginners, despite knowing this, don’t stop. As soon as the trade prices begin to move against them, they allow their emotions to take over. This is when they start making mistakes. Buying stocks without having a plan is a big mistake committed by the newbie traders. Know your price targets, the amount you’re willing to risk and what is it that is making you go long or short.
Mistake #8: Adding to a losing trade
You must have heard of averaging down which is the practice of adding to the position whenever the prices go against you nurturing the wrong belief that this trend will reverse soon. In forex trading, adding to a losing day trade is a precarious practice. There are times when the prices may go against you for a longer time than what you may predict. This will make your losses larger than your expectations. You should trade with an appropriate position size and also set a stop-loss on what you trade.
Mistake #9: Risking more than what you can tolerate losing
It is vital to establish the amount of capital that you can risk losing. Day traders need to risk less than 1% of the capital on any particular trade. This will ensure that if you lose several trades consequently, you won’t lose that much of capital. Simultaneously, if you earn more than 1% on each winning trade, you can even recoup your losses. Control your daily losses so that you don’t lose a huge amount on a bad day.
Mistake #10: Working with a wrong broker
The biggest trade that a trader can make is depositing money with his forex broker. If this first step is taken without enough research, this will push you into serious financial trouble. Not making comprehensive market research could land you in an outright trading scam where you could lose all your funds. Hence, invest your time and effort in choosing a trading broker so that you can be sure about his reputation.
In the world of forex trading, there are several traps that you need to be aware of. If you fall into any of the traps, your account might get wiped off. With that said, take cautious steps and stay away from making the biggest blunders.
 
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