6 common trading mistakes to avoid at all costs

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 Even small mistakes can cost you big when you’re a trader. Read these six common trading mistakes and learn how to avoid them at all costs. 

No trading career is free from mistakes. In the beginning, most traders embark on a trial-and-error journey. And, even professional traders can sometimes get so caught up in their trading that they forget about severe mistakes they should avoid. Well, don’t be any of them. 

Trading is a very popular activity these days, precisely because it can bring you some massive returns. But it isn’t risk-free. One great way to minimize your risk of losing money is to learn what are the most common mistakes made and how to avoid them. 

Here are six common mistakes traders make and how you should avoid them. 

Viewing trading as a make-money-fast thing

It’s not you. This is a frequent mistake made by novice traders, and false marketing is the only one to blame for this widespread myth that trading is a fast way to make money. 

This is nothing more than the mistake of having unrealistic expectations. Now, there is no problem in dreaming big. The issue occurs when you allow your dreams to interfere with the way you view trading. More precisely, having the expectation of winning money fast with little effort from trading Forex or stocks means that you will not act as all successful traders do: be consistent in your trading journey. 

So, how do you avoid this mistake? You simply understand that trading Forex and making big money out of it is a long-term process that requires consistency, commitment, and constant improvement. 

Even if you win a large amount of money in your first days as a trader, which is nearly impossible, this doesn’t mean that you’ve reached your peak. Consistency is vital to becoming an excellent and successful trader. 

Trading more than you can afford to lose

Another frequent mistake made by novice traders, which often goes hand in hand with the previously discussed error, is trading more money than they can afford to lose. Whether you think that trading is a fast way to make money and that’s why you should invest in it all you have, or you believe that the more money you trade, the bigger your returns, both reasons are incredibly wrong. 

Here’s the deal: as a beginner, you have very little insight into the trading market, tools, pairs, currencies, and so on. So, it is very likely to make poor investment decisions. That’s why trading all your money, especially money you can’t afford to lose, is simply a mistake. 

Now, to avoid this mistake, you must practice some kind of risk management, especially since you’re engaging with an activity that is anything but risk-free, financially speaking. So, it’s essential to have a clear idea of how much of your capital you can afford to risk on each trade. 

Not choosing the RIGHT broker

One crucial mistake that traders can make is not choosing the RIGHT broker. Yes, “right” with capital letters because it’s a key idea to stress. 

Here’s the deal: the broker you trade with can genuinely make the difference between a successful or an average trading journey. Everything about the broker, from the tools offered, the quality of their platform, security, and learning materials provided, can make the difference between trading quickly and easily and struggling to enter a trade. 

Now, there are many brokers out there. What’s more, there are actually many good brokers out there, offering quality platforms, many trading tools, and access to the latest news. Yet, besides all that, what makes a trader “the right one” for you is whether or not they offer tools that suit your trading plan and preferences. 

For example, say that you’d prefer to use the passive investment model for trading Forex. In that case, a PAMM forex broker, who also offers all the benefits discussed above, will be the RIGHT one for you. 

Ignoring economic data and news events

If you’re a novice in the trading world, you may not know just how big of influence global events can have on how the investment markets move. More precisely, anything from economic events, political crises, and even natural disasters can modify how a currency performs. So, it would be a massive mistake to ignore what’s happening around the world, especially when it comes to events that can affect your trading. 

Staying up to date on the latest financial or political news is the best way to be prepared to act fast and either sell or buy currency or stocks, depending on how the market seems to move next. 

So, if your broker doesn’t already offer that, get yourself a good world news app and allow notifications to alert you any time something significant has happened. 

Keeping all your eggs in one basket

Diversity is essential in trading. It is what can protect you from losing all your investments at once and no way to bounce back from a terrible market change that you did not see coming. 

What exactly does diversity mean in trading? It means that you shouldn’t invest all your money in the same area. Say, for example, you’re a Forex trader. In this case, you shouldn’t just invest all your money in one currency. If something should happen to the currency’s value and you’d lose money, you’d still have other investments that will continue to perform well. This means that you won’t lose all your money at once and have to leave the trading game for good. 

Allowing emotions to take control over you

Trading takes a lot of discipline from traders part. And, very often, discipline isn’t only related to finances and money decisions. Discipline must often come in how you control your emotions to prevent them from taking control over your investing decisions. 

All financial markets, including Forex and the Stock markets, are a continuously changing battle. Sometimes you win, and sometimes you lose. Both scenarios can trigger some really powerful emotions that may cloud your mind and affect your trading decisions. Don’t allow them to! 

It doesn’t matter if you’re too excited about winning some considerable revenue or too sad about losing money. When you feel like emotions are controlling you, take a step back and don’t make any significant trading decisions. 

By Cynthia Madison

© 2021 Copyright Cynthia Madison - All Rights Reserved

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