Being a “rookie” in the financial market is never easy. Whether starting a new job, starting a business, playing a strange sport, the uncertainty of new and unfamiliar elements sometimes overwhelms and pushes us to make mistakes. Trading is no different. Here are 5 mistakes that new traders often make
1. Trading without a plan or transaction log
Most people know the forex market is very unpredictable, sometimes causing us to sink in our emotions when we are trying to predict its direction, and then forget what we are going to do.
First, in order to succeed, you should have a trading plan and a transaction log. It can be as simple as writing down the conditions that you use to enter, close, stop losses, close orders, risk management rules, and you need to write it down so you can refer, record and review it too. submit. Your trading plan and diary will be your best friends, and your own personal trainer to help you focus on your goals when the market drives you crazy.
2. There is no stop loss
Trading without a stop loss is like climbing glass to wipe high-rise buildings without wearing protective clothing. Every day you still wipe safe, but once the bad luck falls down …
Let’s face it. You are not always right. And that is normal. You need a stop loss, even if it’s just a mental level, to make sure you are sure to survive and fight another day when you are at a loss. Instead of burning down your account, with stop loss, you only have a few small losses, which can be controlled and removed.
3. Revenge-type transactions
Trade revenge is when you are emotionally controlled after a loss-making trade and try to remove your losses aggressively. Often trade avenge will have orders of magnitude 2 or 3 times higher than the previous loss order. Trade revenge is done in the hope that the account will return to the previous level as quickly as possible. In gambling, it is called double element.
It sounds difficult, but it is best to accept losses and do not let the next judgment clouded by emotion. Instead of trade vengeance, focus your efforts and energy to analyze what went wrong, and after realizing that you need to consolidate the next trade is okay.
4. Raising long order losses
Another mistake is that new traders often let stop losses run until they reach a stop loss rather than cutting early. You may think, “Well, I have set a stop loss to limit losses. I think I can control it”, and then the desire is that the price will turn and go in a profitable direction.
One problem is that, although you have defined the SL area, which you think your trade is wrong, you ignore the signals that you should exit the previous order. This signal may come from an economic report that causes the price to run against your order or a candlestick pattern that shows that the price will reverse.
Think like this: If you let your long positions run and take profit orders early, you will end up with a larger loss than your profit. Dead meat, right?
5. Having unrealistic expectations
Having goals in trading helps you to be motivated and disciplined. Without them, how would you continue this work?
But it is important to have realistic expectations. The goal of eating a ton of pips every day sounds delicious, but is it possible? It is possible but with lots of experience and skills, plus luck. However, be realistic, this is not for new traders. If you expect so, you will be disappointed every day because hardly every day achieving the goal.
It is important that you set realistic goals, and take practical steps to help you achieve this.
If you encounter some of the above errors, don’t be sad. I am 100% sure that you are not the only one.
There is a beautiful quote from John C. Maxwell: “A man must really admit his mistakes, be smart enough to learn good things from them, and be strong enough to correct them. ”. By admitting your mistake, you have taken one more step to become a better trader. Now is the time to learn from mistakes and turn bad trading habits into good ones.
Synthesized by top4forexbrokers.net