Trading Mistakes That Prevent Profits
If you are a newbie trader who is just starting out with Forex cryptocurrencies, the stock market or anything in between, the fact of the matter is that you are probably going to lose money, especially if you do not have any kind of training or education. Now with that being said, it is of course possible to make money trading if you have the right tools in your arsenal. Moreover, as long as you are aware of the biggest and most crucial trading mistakes that prevent profits from occurring, then you should be fine.
Of course there is a whole lot that goes into trading. You need to be able to read charts. You need to be able to use indicators and you need to be able to analyze markets so you know when, where and how to trade. With. That being said, even if you are a professional trader, but you commit the trading mistakes that we are here to talk about today, then you are still not going to make any money. Right now we’re going to talk about the five biggest trading mistakes that you need to avoid in order to be a successful trader.
Trading Mistakes to Avoid
All right, So what we want to do right now is to take a closer look at the five biggest and most crucial trading mistakes that you absolutely need to avoid. These are trading mistakes that newbies make on a regular basis, and they’re all mistakes that lead to losses.
One of the absolute biggest trading mistakes that you can make as a newbie is to chase markets. In other words, some people will see that a market has a massive bullish pattern happening, and that this therefore means that they should place a buy trade. However, if this bullish pattern has been going on for awhile and appears to be near its high, many people will still place a buy trade in order to try to take advantage of increasing values.
However, this is more often than not a huge trading mistake because all too often the markets will reverse or suffer from a pullback, which will then cause you to lose money on your buy trade. In other words, one of the biggest trading mistakes that newbie traders make is to buy near the highs when they should actually be looking to place a short trade. The fact of the matter is that markets that are near their highs are generally quite exhausted and will then see pullbacks occurring. What you want to do is to look for areas of support and resistance when a market is in an uptrend.
Sticking with Fixed Position Sizes
One of the biggest trading mistakes that many newbies make, one that is very baffling is that most people will just stick to fixed position sizes. Sure, paying attention to trading indicators, Candlestick patterns and all sorts of technical analysis tools is very important, but many newbie traders forget to change their position sizes. When traders see something that looks like it has the potential to produce a huge profit, they will often just place a trade while neglecting to change the position size.
The biggest issue here is that if you don’t remember to change your positions appropriately, your wins and losses are all going to be very erratic. One of the most important things that you need to do here is to adjust your position size based on your stop loss. If you keep your stop loss levels very tight, you can increase your position size without risking all that much money. Being able to adjust your position size according to your stop loss is something that you absolutely need to learn how to do.
Averaging Into Losses
Yet another one of the most crucial trading mistakes that all too many people make is to try to average into losses. In other words, if you bought a certain stock and it has decreased in value greatly, thus causing you to suffer a loss, some people will actually try to buy more of that same stock, but in the other direction, thus hoping to average out their losses.
In other words, people will open a position in the opposite direction of the original trade in the hopes that they will at least break even or at even make a profit. However, this is a massive trading mistake and it often just doesn’t work. Even if it does work, it’s generally not worth the effort.
Hesitancy to Cut Losses
Perhaps one of the biggest trading mistakes that all too many newbies make, which is closely related to the mistake that we talked about above, is that newbies will hesitate to cut their losses.
If a trade doesn’t go the way you planned on add going, you might be tempted to hold onto the trade for a longer period of time in the hopes that it there will be a pullback or a reversal, thus allowing you to make profits even on a trade that is currently losing.
However, the fact of the matter is that there is absolutely no guarantee that there will be any kind of reversal or pullback. You are much better off closing a losing position as soon as possible, analyzing why you opened a losing position in the first place, and then make adjustments as needed.
Using Useless Information
Another one of the biggest trading mistakes that ultimately people make is to get their information and advice from sources that just have no business providing others with advice. Many people will attempt to go to social media platforms or trading forums in order to get advice from other people. Without sounding too judgmental, the fact of the matter is that all too many people who feel that they have the ability to give advice really aren’t qualified to do so.
In other words, people who don’t know the first thing about trading will try to tell you how to trade. And of course, this is not a good thing. Don’t go to Facebook for trading advice and don’t go to Facebook for economic news. You can’t rely on social media platforms and forums for solid trading advice. If you want good information that will help you make money when trading, you need to do your own analysis and research, or at least follow actual traders who know what they’re doing.
When all has been said and done, the bottom line here is that if you manage to follow all of the tips that we have provided you with, or in other words, if you manage to avoid all of the five trading mistakes that we talked about, then you will greatly increase your chances of making money while also decreasing your chances of suffering huge losses.
If you need help day trading, and what you need is a comprehensive education, particularly on Forex trading, then the best place to be is the Income Mentor Box Day Trading Academy. At this time, the IMB Academy is the most comprehensive, user friendly, effective, and affordable Forex trading school out there.
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