A Successful Trader Must Avoid These Six Trading Mistakes

So you want to be a successful trader? Well, you will have to avoid making the common mistakes that many traders are often victims of. When you learn to trade, you will make mistakes, but the traders who really start making money are the ones who learn from those mistakes and figure out how to stop making them over and over again. In this lesson, I'll discuss the most common mistakes traders make and offer some simple solutions. After that, you can learn from them and be sure to avoid them as you continue to analyze and trade forex.

1) Trading too much and too much at once

This is probably the most classic mistake 100% of beginners make and about 90% of other beginners make. Moreover, when about 90 percent of traders trade too much, it is not surprising that about 90 percent of traders lose money over the long term. Another interesting piece of news is that if you find yourself making more than one trade at a time, you may be trading too much. There really is no logical reason to trade more than once at a time.

Most people simply can't learn to ignore the temptation to trade constantly, so they make up all sorts of reasons why they should trade or make up signals that aren't really there. The cold truth of all this is that you will never consistently make money trading in the markets unless you learn to control yourself and stop overtrading.

Perhaps the quickest and easiest way to train yourself to stop overtrading is to change the way you think about trading and the actual components of "profitable trading." Once you start to remember that less is more, and that you will make more money over time by Trading less, you start to look for reasons why a potential trade might not work out, rather than trying to find any small reason you can get into the FX Trading Market.

2) Spend too much time thinking about trades and looking at charts

Similar to overtrading, generally just trying to trade too much. Common mistake traders make is to spend too much time going over and over charts, even when there are no obvious price behavior signals to trade. As a result, what ends up happening is that if they follow a trading plan, they usually don't trade.

If you find yourself thinking about your markets and trades almost all the time, it's a safe bet that you're also overtrading and losing money as a result.

You must build the chart into your trading plan in the planned time away from it. Then, if you follow your trading plan, those regularly scheduled hours away from the chart just become "part of the plan," "part of the process." If you start deviating from the process and end up losing money, you have only yourself to blame. So, at the end of the day, it comes down to your ability to maintain discipline and stick to your plan, which is why most people lose money on trades; Because they simply can't stick to a plan and maintain discipline over a long period of time.

3) Try to make trading decisions from a short time frame chart

One of the biggest mistakes new traders make is day trading. Many people heard about "day trading" before they learned more about it. This leads them to start off on the wrong path, starting them in a short time frame trading cycle, such as 5 minutes or 1-minute chart, which also leads to serious overtrading and gambling as a trading addiction.

The lower time frame chart is not nearly as important as its higher time frame chart counterpart. The reason is simply that the higher the time frame, the more data it reflects, and therefore carries more "weight" than a short time frame. For example, a daily chart bar is much more important than a 1-minute chart bar. You'll need more patience to trade over a longer time frame, but in return, you'll get more reliable trading signals and less stress, a good trade-off if you ask me! When trading day chart, you can simply set up trades and leave for 24 hours or more; This is how one can trade like a nomad and enjoy the lifestyle that trade brings.

4) Trade with real money before you test it on a mock account

This mistake is like a death sentence for your money, but time and time again, novice traders do it. The mistake is to trade with real money before you've even tried your strategy on a mock account. There are usually a lot of things that end up happening. Traders are unfamiliar with accounts and how they work, so they make stupid mistakes, such as taking more risk than they thought, or not entering stops correctly. This, of course, causes them to lose money.

In addition, because you did not test your trading strategy on a mock account (under real market conditions), you do not even know if your strategy or your ability to trade will be effective. Anyone would take their real hard-earned money and start taking risks in the market and practising zero in the demo, which seems crazy, but hey, people go to Las Vegas and bet all their money away, so it's really just another form of that.

As someone who wants to become a skilled and profitable trader, your task is to test your strategy as well as your trading abilities on a reputable simulated trading platform before you try trading in real-time! This will enable you to work out the "bugs" of the platform you may have, and it can also give you an understanding of the market and your trading methods without having to put in real money.

5) Confused traders caught in the "black hole" of news interference

The "black hole" of news interference is real in the trading world, and if you're not careful, you'll fall into it until all your money is gone.

What happens is that traders end up "looking for reasons" why their trades should succeed, as is well known, you can find almost anything you want on the Internet, and you can find many opinions for or against any argument or position you want to take, including trading. The other thing that happens is that traders go online and start "studying" economic and trade news and start thinking they've "figured out" what's going to happen next based on the XY or Z economic news releases. They then trade on that advice, which is very dangerous. This is dangerous because trading news or economic news is usually already priced into the market, in other words, it is already factored into price behavior, and the "big boys" have taken what they think will happen out ahead of the economic news.

Then, when the news is finally released, there will be a market wash, with prices quickly spiking in one direction, only to bounce back in the other. This is obviously almost impossible to trade and causes most uneducated traders to lose money. This is the main reason you shouldn't trade on news alone.

The act of trading raw prices removes the confusion of trying to trade news. As mentioned above, the news and everything that moves the market is already reflected in the footprints on the charts; Price behavior. So once you've learned to read and trade price behavior, you're also learning to read and trade news without actually analyzing or reading any of the news itself.

6) Not understanding that every trade has random expectations

The big mistake most traders make about trading is that they simply don't understand that every trade they make has an equal chance of ending in loss or profit. Now, that's not to say you can't have a high percentage winning strategy, because you can. But the thing about trading is that for any given series of trades, there will be random wins and losses, which means you never know the order of wins and losses in the trade sample. However, if you expect your strategy to win 60% of the time, you can expect that percentage to show up in a sufficiently large sample size.

The same thing happens when you flip a coin. You know you're going to get heads 50% of the time, tails 50% of the time, but in 50% expectation, you could say there are 10 heads in a row, and if you don't get it you might get confused and it takes multiple flips to get to 50% heads.

The same goes for trading! In a sample of 100 trades, you might lose 10 times in a row, but after those 100 trades, you still have a 60% chance of winning. The implications are huge. If you are not loyal to your trading plan and remain disciplined even during a losing streak, you will panic and may overtrade and go too far off track, eventually causing your account to explode!

Remember: Any deal is basically meaningless! It is the end result of a lot of trading, and it will show you whether your strengths and trading ability are actually profitable. This also means that you need to manage risk to a level where you can see your strengths play out with a large enough sample size!

Conclusion:

When you learn and trade markets, you will make mistakes, especially when you are just starting out. But the difference between winners and losers is learning from mistakes. The traders who go on to make a lot of money in the market are not those who never make any mistakes and trade "perfectly", but those who learn to avoid and learn from the mistakes discussed in this lesson. It's easy to make the same trading mistakes over and over again until all of your trading capital is gone. Your goal is not to allow this to happen to you.

[Disclaimer] The above articles are solely personal opinions and are not intended to be investment advice. Only for mutual learning and sharing. There is no express or implied warranty as to the accuracy or completeness of the information provided above. Anyone who relies on the information, ideas, or data in this article does so at their own risk.