Exploring the top 4 mistakes of the novice traders
Posted On July 13, 2021
Novice traders always think they are the best in the business. They don’t want to consider the fact that they can lose money due to some minor faults. Trading is a very serious business and you should be extremely careful about your trade execution process. A small mistake can cost you a fortune in your trading profession. Many traders think that by investing a big amount of money they can avoid the common mistakes at trading. But this is not entirely true. To survive in the retail trading industry, you need to know about common mistakes.
Though there are many common mistakes you can commit as a novice trader, we are going to highlight the most prominent ones. Go through this article as it is going to change your life within a short time.
Problem of overtrading
Overtrading is one of the main reasons for which inexperienced traders are losing money. The rookie traders expect that they can earn more money by executing more trades. But this not the way by which this industry works. To survive in the retail trading profession, you have to develop strong sets of skills. Most importantly, you have to take the trades based on proper logic. Try to find the trade signals in a higher time frame as it will give you a better risk to reward ratio. Once you become good at analyzing the high risk to reward ratio in the market, you should be able to execute the trades with much more confidence and this will make you feel better in the trading profession.
Choosing a low end broker
You should always trade the market with the top brokers. If you trade with a low-class broker, you are going to face many problems. For instance, you might experience heavy slippage during the trade execution process. That’s why the elite traders love to trade with the Saxo capital markets as they provide the best tools. Most importantly, you will not get biased comments from the broker’s end to trade more. During the trade execution process, you can also use the most advanced tools which will significantly improve your trading process. Though high-end brokers have some big deposit requirements as compared to low-end brokers, it is for your betterment.
Not having a professional strategy
You must learn to trade the market with a robust trading method. Failing to trade the market with a robust trading method can make things complex. For instance, you will be taking the trades on the low-quality trade signals and thus you will lose more money. But if you chose a reliable trading strategy, you will know why you are taking the trades based on that particular trade signal. It might take a while to develop a professional trend trading method but you can always use your demo trading account. The demo trading account will give you the perfect learning environment where you won’t have to risk any real money. Trade in the practice trading account for as long as you need to, but make sure you are confident in your actions.
Lack of knowledge
Overtrading is often caused by a lack of knowledge. Before you start taking trades, you have to be honest with yourself. Unless you are well aware of the basic facts of the market, you will be losing money most of the time. The overall risk factor will be so high that you will never learn the proper way to execute high-quality trades. Take your time learning about the technical analysis process. If necessary, enroll yourself in a professional trading course. Learn the basics of this market so that you can withstand the losses with a big smile. And try to find a trade setup based on a high risk to reward ratio. This will only be possible when you have good solid knowledge about this business.