5 Newbie Trading Mistakes to Avoid
If you are a beginner who is just getting into the world of trading, no matter if you want to trade cryptocurrencies, Forex or the stock market or anything in between, there are a variety of trading mistakes that you absolutely need to avoid. Now the reality here is that trading can of course be extremely profitable, and if you trade the right way, you can quite literally make thousands of dollars per day, every single day.
With that being said, the fact of the matter is of course that trading is not easy. It takes a lot of skill, effort, and practice to be a profitable trader. Moreover, there are many different mistakes that you need to avoid in order to be profitable. Right now, we are going to cover all of the most crucial newbie trading mistakes that you need to avoid in order to be successful.
Blowing Your Account on a Single Trade
One of the absolute biggest trading mistakes that newbies tend to make is to put all of their eggs in one basket. Folks, this is a primal rule. In trading, you should never put all of your eggs in one basket. In fact, most professional traders recommend that you invest no more than two percent of your total trading account into a single trade.
Many newbies will see what they think is an absolutely amazing opportunity. And yeah, sometimes this opportunity might be real, but more often than not it could just be a false signal, or it could be an error in judgment.
If you put all of your money or the majority of your money into a single trade and it goes South, then you will lose it all. It’s much better to diversify your trades and to make several small trades instead of one large one. This is one of the biggest newbie trading mistakes that all too many people make and it often results in accounts being totally blown.
Failing to Analyze the Market
Yet another one of the biggest trading mistakes that all too many newbies make is to forget to analyze the market before trading on a daily basis. As a newbie trader, you might think that it is OK to analyze the market just once per week, maybe on the Monday and then trade for the rest of the week based on what you found out on that Monday.
However, this is a massive problem because the fact of the matter is that things change very quickly in the economic world, things can change not only from one day to the next, but from one hour to the next.
The bottom line here is that you need to use your charts, your indicators and your economic calendars before you place every single trade. There is no point in trading blindly when you can be well prepared by doing a bit of research. It’s not like you have to spend a whole day doing research, but taking a few minutes to check up on the economic calendar and your indicators is definitely required.
Trading Without an Education
Another huge trading mistake that newbies make is to trade without any kind of knowledge or education. Now this is not really the fault of you newbies because the bottom line is that there are tons of trading gurus out there who say that you only have to learn one or two little things in order to become filthy rich. Folks, his is simply not true.
Trading is extremely difficult and it takes a whole lot of knowledge and practice to do so properly. You need to know how to read indicators, how to read charts, how to analyze the market in so much more.
Therefore, before you start trading, it is essential that you get some sort of education. Now, we’re not saying that you need to go to Harvard to study economics, but taking a few day trading or swing trading courses is definitely recommended. The bottom line here is that avoiding all of these trading mistakes is extremely difficult when you don’t really know what the right way to trade is.
Trusting the Wrong People
When it comes to trading mistakes that way, too many newbies make relying on unreliable sources of information for trading tips is one of the biggest ones. The fact of the matter is that people who don’t know how to trade will often go to social media and trading forums for their daily information.
People, you cannot rely on social media and random forums for your economic and trading information. Heck, you can’t trust social media to provide you with reliable information of any sort, whether it be political news or economic news, you cannot in any way base your trades on anything that people say on social media. Remember anybody and everybody can post on social media and on trading forums.
Unless the people posting are actually professional day traders with proven records that you know are the real deal, then in no way should you rely on these people. All of the trades you place should be based on your own analysis and research.
Not Cutting Losses in Time
Whenever the other biggest trading mistakes that all too many newbies make is to stay in losing trades in the hopes that things will turn around for the better. If you have a losing position, then there is absolutely no point in staying with that position any longer.
Sure, in some cases things may reverse and you might see a pullback, that will lead to gains, but with that being said, chances are big that the trade will continue in the same direction, and you will just lose more money.
It makes a lot more sense to cut your losses as soon as possible and to open a new trade rather than staying with a losing position. If you stay with a losing position, there is a huge risk that you will just continue losing more money. And of course, that is not what you want.
Newbie Trading Mistakes – The Bottom Line
If you can manage to avoid the variety of trading mistakes that we talked about today, then your chances of being a successful trader greatly increase.
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