7 rookie mistakes that kill your trading account

Which makes sense? Do you learn from your own mistakes or from those of others?

Obviously, it’s the second one, since it’s free. Also, it teaches you a lot in a short amount of time. So, it saves you time, makes you smarter, and gives you better results.

In general, this is true, but in trading, you have an even better reason to do so: you can cut your losses. You don’t have to waste your money and learn the hard way through trial and error.

Why not take the easy way to learn how to trade when you can?

So, here are the mistakes that most traders make when they start out. You don’t have to do it either. You read about it here.

Mistake #1: Going diving without being ready

Which is smarter: learning to swim in a pool or in the ocean? The pool is it.

In this comparison, the pool is the practice account, and the sea is the real account.

Using a demo account to trade can make you feel like a kid. You might even feel stupid for working so hard for nothing.

Some people even say that trading on a demo account doesn’t involve emotions, so a trader won’t be ready for real-world problems.

But here’s the thing: the demo account doesn’t simulate what a real account is like. Instead, it shows how things are in the real world. It helps you figure out how different currency pairs relate to each other and when the best time is to trade. It also gives you a place to test your baby strategy. If the plan works well and gives you a good reward, your confidence goes up. When you’re new to trading and prices move away from where you got in, having confidence is the most important thing. You need to know when to hold on and when to let go. And a demo account is a good way to do that.

Remember, it’s a pool, and you have to learn how to swim in it, but it might not teach you how to swim in the ocean’s currents. As a person who wants to swim (or trade), you have to take it.

Mistake #2 — Overtrading

Why not make two or even three of the same thing if one is good? It makes sense, doesn’t it?

Nay, wrong. That’s not how business works.

You can’t force the market to give you good trade opportunities.

If you find a lot, it means you aren’t doing your research properly.

Before you realize this mistake, you would lose half of your trading capital.

What you lose in a few minutes might have taken you months or even years to get.

So, you need to be smart about which trades you make.

Overcoming overtrading syndrome

The main reason traders trade too much is that they either don’t have the patience or don’t understand how important it is. Patience isn’t just about waiting for the right trade setup to happen.

A true trader has patience in all parts of trading, including setting up trades, waiting for them to pay off, and waiting for years to build up his or her trade account.

And you can’t get the traits of a typical patient overnight just to trade.

It requires you to change who you are. Try something new, like hunting or fishing. Because preys are hard to catch, just like trade setups. To catch it, you have to wait for hours. And hobbies like these slowly change who you are. It makes you more patient and helps you become a better trader.

Mistake #3 — Avenging for Revenge

It’s the one thing every trader knows they shouldn’t do, but they can’t help but do it anyway.

At times, the market can be very cruel. You can suddenly go from winning to losing, or you can keep losing for no reason you can figure out.

It sets off a chain of bad feelings, and you want to get back what you lost right away.

But you lose more the more you try. It’s because the trades are not based on logic or strategy, but on emotion and desperation.

And by the time you realize you were wrong, it might be too late.

So, if you lose a bunch of trades in a row, take a break, clear your head, and let yourself cool down. Then, go back to trading.

There are many benefits to taking a break from trading. It gives you an honest look at what went wrong. So don’t be afraid to stop and rest. After all, it’s the only thing in the market that you can control. Here are some tips that will help you stop revenge trading.

MUST READ  10 Tips to Build An Effective Forex Trading Plan

Mistake #4 Trading without a stop loss

This idea is becoming more and more interesting. Many mentors are taking a page out of the pros’ book and telling people to do it. But you won’t be able to use it.

Because the resources available at their (pros) disposal and at your end are quite different.

They do have a team of experts in the basics and a lot of money.

So, they trade without a stop loss, but they do so based on strong fundamentals. Also, they use different strategies that you don’t know about to avoid short-term loss.

As a store owner, you should keep things simple. It is best to get out of a position when a technical structure breaks.

It lessens the damage and lets you live another day.

Also, if you are new to trading, you will make mistakes. So, get the most out of every dollar and take as long as you can to learn.

Mistake #5: Using a small stop loss when trading.

Stop loss is not what you think you can afford to lose. It’s the value that the structure of the technology requires.

In an attempt to limit their losses, traders often make this mistake. But it only makes more traders lose, which makes you less accurate and less sure of yourself.

So, this is the main reason why trading mentors tell people to avoid stop loss.

If you can’t afford a wide stop, reduce the size of your lot.

Set the amount of money you can spend, and then figure out the size of the lot.

Sounds hard and boring, doesn’t it? We have the perfect tool to make this difficult task simple. If you want to trade like a pro, you should do it the right way.

Mistake #6: Putting money on a news story

No one can say no to the chance to make money quickly. And trading in the news should make it so. You should not give in. Why?

Because the news is not the most important thing.

The most important thing is how the traders and the rest of the community feel about what happened.

Take, for example, the FOMC statement that came out on July 30, 2019. The committee cut the interest rate by 25 basis points, which, according to convention and common sense, should have caused the price of gold to go up. On that day, many retail traders had a huge number of long bets. But in the end, they were killed by the market. In spite of what most people thought, it fell 300 pips and confused everyone.

Well, traders usually have their own explanations, like “It wasn’t good enough or what was expected.” The reasons don’t matter because your broker would call you with a margin call before you could dial “why.”

So betting on the news is more of a risk than trading. Because you can’t figure out what other people are trying to say.
So, the best thing to do is stick to the charts.

Mistake #7 Trading without a plan

This is the one trading mistake that leads to all of the others and even thousands more.

When you don’t have a plan, you’re more likely to just go with the flow. And trading gives you a lot of those chances.

Also, the plan tells you what is right and wrong.

It’s all about sticking to the plan when you trade. That’s what will bring you success.

So, choose a plan. Here are 3 of the best Forex trading strategies that are powerful but not being used.

Or, you can choose a sign to help you. Pipbreaker and Velocity Finder are the best in the business.

Then make a risk-reward ratio and stick to it.

Conclusion

The market is a paradox, that much is clear. But to do well, you need to keep things simple.

And experts are always giving pep talks to get people to try new techniques.

You can learn it, but you shouldn’t try to use it until you’ve had the chance to do so. Also, if a strategy works for you, use it until it’s no longer useful.

“If you don't find a way to make money while you sleep, you will work until you die.”

- Warren Buffett

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