Trading is the process of buying and selling securities, a successful trader will apply every bit of his knowledge to lower the risk of loss. Beginners, who lack enough knowledge required for trading do mistakes such as frequent trading and short hold periods.
Many other mistakes as such can be avoided easily, if they trade with a little attention. Beginners should avoid making mistakes such as
- Frequent trading:- Trading too frequently or overtrading can be disastrous to successful trading business, learning when not to trade is very difficult than to learn when to trade. Experienced traders have learnt it in a hard way that trading too frequently may result in excessive loss. There are strong evidences everywhere that shows traders who overtrade get significantly less returns than those who do not.
2.Lack of varying trading strategies:- When a market correction takes place then losses occur even for experienced traders. If you diversify your trading strategies, these types of losses are avoidable and you can earn healthy amount of profit.
The key behind diversifying strategies involves a mixture of different trading techniques that take advantage of a variety of trading timeframes.Finding a right broker will ease your problems and can present you with multiple strategies for trading. Cmtrading, can be an ideal choice for beginners it’s interface is user friendly. Cmtrading offers mt4 platform on which traders cannot only tradebut also can get plethora of information such as Live analytics, real time quotes at their fingertips
3.Herd mentality:- Avoiding herd mentality is the key to be a successful trader, very few people know what they are doing in trading business. Majority of the people who trade end up losing their money. The typical buyer’s decision usually is influenced by the actions of his acquaintances, neighbors or relatives and may end up buying hot stocks at a very high price or may invest in short positions for securities which are already plunging. More experienced traders are influenced by the market trend.
4.Trading different markets:- Not to confused with the varying trading strategies, this term means trading to and fro between different markets. Beginners may flit from market to market, e.g., from stocks to options to currencies to commodity futures, to name a few. They don’t possess enough knowledge to do this and may get distracted. This distraction will not help them in gaining enough knowledge to excel in the market.
5.Not implying stop loss:- Beginners who day trade must have stop loss at any cost. Stop loss will put you out of trade if price moves against you by a specific amount. It will assure that you get out of a losing trade,A stop-loss order should be placed at the same time a day trade is taken, not after. You want that stop loss to be active as soon as you enter a trade, failing in doing so may result in loss far greater.
Trading will be very profitable if everything works with respect to your plan. By avoiding mistakes as such you can also learn about the process of trading with time and stay profitable, it will also make you resilient against loss. Loss is imminent in trading business but by keeping a close eye on market and following trends your profit will have a stark appearance over your account sheet.