Top 10 mistakes of novice traders
Traders, like all people, make mistakes. Besides, some people learn from others' mistakes and start trading more effectively, but they are, unfortunately, in minority, while others cannot learn from their own mistakes, stepping on the same rake several times.
In any case, Forex trading for beginners consists of a whole series of typical blunders that few people manage to avoid.
In this article we will formulate 10 most common mistakes made by Forex beginners. By getting acquainted with them a trader can take a more self-critical look at his work that will surely have a positive effect on the results of his trading operations. So:
Major mistakes of traders
1. Prolonging of losing positions.
All beginners close profitable trades as short as a couple of points easily and quickly for some reason, but they are ready to wait for days to modify an unprofitable position. Many traders even stop using stop-losses, allowing a losing trade to "eat" the entire deposit in some time. Limit your losses.
2. Move the stop loss following the loss.
This mistake overlaps with the first one. Often traders recklessly move their stop-loss following a losing position, hoping for a "wind of change" that will turn the market in their direction.
Forex beginners should just admit their mistake and trade according to their initial plan. A triggered stop loss will certainly spoil your mood, but the psychological mood will come back to normal much faster than with a total loss of the deposit.
3. Bilateral positions.
Placing locking positions instead of the traditional stop loss is a question that has been on the minds of traders for quite some time.
This method has its zealous supporters, as well as its equally well-reasoned opponents. On the one hand, it is psychologically easier to open a counter-order and freeze losses of the losing position, on the other hand, it is a great skill that comes to a trader only with experience.
But beginning traders think differently, rashly abandoning stop orders in favor of lock orders. Usually this type of trading does not do any good, in fact, most traders working backwards only deliberately prolongs the inevitability of losses and increases their amount.
4. Desire to win back.
Here the situation can develop in two directions. In the first case, the trader after a losing trade immediately opens another position in the market without analyzing and predicting its actions.
In the other case the trader opens a position later using a larger amount of capital violating all money-management laws.
Both of them are unfortunate. A true trader is devoid of emotion, subjecting his actions solely to cold calculation. Forex is not a casino. And to really make a profit you have to devote some time to analyzing the trading situation and instantaneous decisions will never lead to success.
5. Closing profitable positions prematurely.
The old trading rule is "let profits rise, but close losses immediately". But beginners close profitable positions too quickly, not allowing profits to increase. It turns out that total profit even from a large number of good trades made in a row may overshadow a single unlucky entry.
Necessary to wait for take profit triggering, or leave the market in accordance with the rules of his trading system, otherwise trade will be meaningless, and therefore unprofitable.
6. Lack of risk management.
Every trader is first of all obliged to save the money he/she already has, and only then to build up capital.
Profitability of a single transaction does not matter, what matters is the result at the end of the whole period (month, quarter, year). Any most successful trader can have a whole series of losing trades. You should calculate your deposit in such a way that it is possible to make 20 losing trades in a row.
7. emotional outbursts.
All beginners get highly upset with each loss and just jump with happiness after each profitable deal. You must pull yourself together, shake off all emotions. The feeling of feeling down, as well as "giddiness from success" interfere with trader's real estimation of his own forces.
8. Overconfidence in analysts.
Many traders who don't have a profitable trading strategy start listening to analytics. But not all analysts are traders, and they are not responsible for anyone's deposit. You should make decisions only by yourself.
9. Do as you want, not as you need.
Often there are situations when it seems that it is the perfect time to make a big bet. This may be due to the news or other factors. But in any case the laws of the market do not change, the laws of trading should not change either. A trader develops a trading system, but then the system and only the system guides the trader's actions.
10. Constant monitoring of price charts.
You don't have to stare at your monitor all day long. You can assess the situation on the market in just a few minutes. Moreover, long time, supposedly studying the market leads to doubts. Doubts give rise to uncertainty in your trading system, and uncertainty will always lead to mistakes.
The Forex trading algorithm is simple: open a position, wait for the order to trigger. If take profit is taken, you are in profit. You win back the stop loss, you should proceed to sort out the mistakes.
And especially there is no point in trading on minutes, mid-term forex strategies are safer. And the sooner a beginner debunks the myth about staggering profitability of intraday trading, the sooner he will succeed, and the above rules will only contribute to the success of the trade.