4 Deadly Sins For Your Trading Career
It’s a field that has suddenly exploded in popularity; with accessibility to software and information the most probable reason behind this. However, with so many novices trying their hand at trading, it goes without saying that “newbie” mistakes can quickly be made.
This is the reason behind today’s guide. We will now over four of the most common mistakes performed by young traders, in a bid to smooth out your performance in the early days.
Sin #1 – You follow so-called “hot tips”
Whether it’s from a random blog or social media, there are all sorts of hot tips doing the rounds these days. In fact, some sources even charge for these tips!
Sure, you might strike lucky with some of these, but it’s most certainly not a long-term approach you should follow. If you are simply carrying out the advice of others, you have to question why they are not just keeping this “golden” information for themselves. Let’s not forget that trading is anything but easy and before each and every trade, you need to know the reasons why you are making it. If you don’t, it’s a blind decision that could cost you money.
Of course, there’s something of a fine line here. After all, you should accept all of the help you receive in relation to strategies, and even the software like MT4 for Mac which you can use. Draw a limit at accepting specific tips on trades though.
Sin #2 – You don’t take margin into account
You might think one particular trade has little chance of failing, and as a result leverage most of your account on making that trade happen.
Then, when it doesn’t, you are suddenly left with an account with very little remaining in it.
This is called overleveraging and tends to occur following a rush of blood to the head for traders. You have got to be as strict as possible when it comes to making these trades – you need a set percentage to be willing to trade, and not surpass this.
Sin #3 – You don’t have an exit plan
There will be occasions where your trades aren’t going to plan, and you will need to cut your losses. In the heat of the moment, it’s difficult to know when to do this. This is why you need an exit plan from the start, to know when to set your stop-loss order.
At the same time, there will be occasions when you need to know when to sell your trade, even if it seems to be getting stronger. This is where experience matters; you will quickly notice the signs on when it’s time to sell a trade and take your profit.
Sin #4 – You fight the trend
A lot of young traders think that just because a stock has reached its lowest point in years, it will bounce back soon. Well, this doesn’t always occur. Similarly, just because a stock has got to its highest point, it doesn’t mean to say that it’s going to stop rising.
Umpteen experts in the field have highlighted just how important trends are, but make sure you read them properly.
