In this post, I will
tell you the top 8 ways I/you can use to quickly ruin my/your career as a
trader, especially if you are a novice trader.
Reading Time: 4 minutes Financial activity: Trading Knowledge level: Beginner
Summary
1 - Lack of education
2 - Lack of experience
3 - Not having a clear plan
4 - Emotional trading
5 - Lack of risk management (Taking unnecessary risks)
6 - Overtrading
7 - Trying to emulate others
8 - Mixing personal and trading finances
Conclusions
1 - Lack of education
Novice traders should invest time in learning the fundamentals of trading, including technical analysis, risk management, and trading strategies.This can be done (sometimes for free, also) through books, online courses, webinars, and educational resources provided by reputable trading platforms.
Traders should conduct thorough research on the financial instruments they intend to trade. This includes researching market trends, historical data, and related news. Up-to-date information on factors that can affect the market is important for making informed trading decisions.
2 - Lack of experience
Before starting live trading, traders should practice their skills in a simulated trading environment (i.e. a demo account). This allows them to gain real-world experience without risking real money. Many trading platforms offer demo accounts where traders can practice making trades and testing their strategies.3 - Not having a clear plan
Treat trading like a business, not a hobby!Plan your strategies and stay educated.
Many new traders fail to make a trading plan before they start trading. A trading plan helps define your goals, risk tolerance, and strategy. It is essential to make informed decisions and maintain discipline.
Develop a methodology for trading based on facts and data. Avoid making emotional decisions and rely on a systematic approach to trading.
4 - Emotional trading
New traders often let emotions dictate their trading decisions.This is wrong because they can panic when the market fluctuates or become overconfident with consecutive wins. It is important to control your emotions and make sound decisions based on analysis and strategy (trading is a technical job).
5 - Lack of risk management (Taking unnecessary risks)
Traders may not implement proper risk management techniques.
They may risk too much capital in one trade or not place a stop-loss order.
Implement the right risk management strategies to help protect capital and
minimize losses.You must develop a solid understanding of risk management techniques. This includes setting stop-loss orders to limit potential losses, defining positions based on their risk tolerance, and diversifying their portfolios to spread risk
Avoid taking unnecessary risks and do everything you can to preserve your trading.
6 - Overtrading
Novice traders tend to over-trade, which means they trade too often without a plan or strategy. Overtrading can lead to burnout, poor decision-making, and unnecessary losses. It is important to be patient and wait for high-probability trading opportunities.7 - Trying to emulate others
While it is natural to admire successful traders, trying to copy their strategies without fully understanding them can lead to losses.Learn from others, but establish your own trading identity based on your unique skills and risk tolerance.
Remember another important fact: competitive trading, such as, for example, that of Robbin's cup, is very different from the one to be used in everyday operations. I greatly admire great champions like Larry Williams or Andrea Unger and I study their strategies, but I always look for my way to trading.
8 - Mixing personal and trading finances
Money in your trading account should not be used for personal expenses.Keep your business needs separate from your personal needs and avoid risking capital that shouldn't be risked in the first place.
Conclusions
By being aware of these common mistakes, traders can take steps to avoid them and improve their trading performance.It is important to educate yourself, develop a trading plan, manage risk, and maintain discipline.
Finally, I must confess that I wrote this post mainly for myself, to remind me how to become a better trader.
A sincere wish of good work to all!
Written by F. GRAMOLA (*).
(*) Member of S.I.A.T., the Italian Society of Technical Analysis (member society of I.F.T.A. – International Federation of Technical Analysts).
Warning
We merely cite our personal opinions for educational purposes only.
All trademarks are the property of their respective owners.
Investing and trading are risky. Don't invest or trade money that you cannot afford to lose.
Initial photo by Brett Jordan on Unsplash.
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