If you are a newbie when it comes to trading make sure that you know what are some mistakes that people make, and understand what you need to avoid. Although mistakes are a part of learning & growing you don’t have to experience them first-hand. In fact, you can learn how to avoid them with the help of this article and learn how to avoid some rookie mistakes. Keep on reading and find your answers down below.
12 Trading Strategies Every Trader Should avoid
1. You don’t have a plan
This is the most common and rookie mistake. Without a plan, you can’t make your future decisions or financial investments/risks. Do not make a huge impact on your account just for the sake of it and be well-aware of your assets. Financial plans & ideas of any kind will always help out with your future steps & goals in life, especially when it comes to trading.
2. Failing to cut losses
A lot of times people struggle to cut losses when the trade goes south and if it fails them. Newbies have a hard time exiting the plan and determining the price early on since they lack judgment in this field and this department. As an experienced trader, you should cut losses at a predetermined price without hesitation.
3. Making trades with a bad risk to reward ratio
Your reward in the final outcome should always be more impressive & higher than the risk that’s ahead. Sure, the risk is always a contributing factor, but sometimes it can be quite high or low. You should aim for a 55:45 ratio in the worst case if you’re trying to make some type of profit. With this simple rule, each trading will be profitable and fully positive.
4. Taking positions that have an uncomfortable magnitude
Beginners have a hard time knowing how to handle a situation of a huge magnitude. This is why you need to determine how much money you’re willing to put in one trade (without going all out or without making questionable decisions). Always stay within your comfortable position size, and do not take a piece of something that you can’t conquer.
5. You’re focusing way too much on the news
Different news & resources can give you a lot of intel on your preferred trade. There are loads of different podcasts & forums that you can listen to as well to get the hang of it all. However, what you should never do is overdo it. The truth is, the market’s opinion on any given day may be different, and consulting someone who’s been with you and in your time since day one might be a good move.
6. You are not listening to the news at all
On the totally opposite side of the spectrum, some people don’t pay any level of attention to the news. Ignoring news and going all on your own and based on your instincts without any data is a bad move. Some major economic reports & moves are key to knowing how to play it out, or at least how to play it safe.
7. Changing your trading strategy too often
Any trading strategy needs time to show its potential, and staying persistent is more than important. Did you know that constant shift between trading strategies creates confusion and chaos that can make an impact on your account? Give it time with your chosen strategy and see if it takes off before you end up doing anything new.
8. You are doing it just for fun
The goal of trading is to make money for every person, right? Well, this is why you need to be smart with your investments and your approach. If you are doing it just for fun and out of a hunch you are on a path to lose a lot of money. Never gamble with your or someone else’s money, it is a bad move at all times.
9. You don’t have a journal
A trading journal will help you keep your thoughts, your mind & your goals in check and running properly. With enough data, you will be able to analyze what works well for you and what to stay away from. Although it may seem like a hassle, this is something worth your while!
10. You are way too emotional
Are you an emotional person in general? Do you tend to lose your temper, or do you cry when you make a cardinal mistake? If any of these apply to you; did you know that trades & feelings don’t go well and you shouldn’t mix them together? Never work with your trades when you’re angry or frustrated and do not work when you’re heated or fueled up. Get back to trading as soon as you cool down.
11. The pullback tactic
This is a trend that is known for its effectiveness among traders. With it, it means that the trader is looking for a certain stock that has a reputable trend at the given moment. You, as a newbie, should act as the price starts to decline. Pull back out once the price starts to rise again. However, never do this within your first days of work.
12. Scalping tactic is not for everyone
Scalping can be a huge mistake if not done right or if you are not professional or skilled enough when it comes to it. Its purpose is to result in high profit, but you need to buy and sell within some unique predetermined levels. This process is super fast and can be hard to understand.
Ready to begin trading the right way?
If you’re ready to start trading or you wish to learn some new facts you can read more here and figure out all there is to it. Read different reviews, understand more about Forex, Cryptos, Stocks, as well as broker rules in general. Start trading today and avoid these rookie mistakes with the right team.