5 Most Fatal Beginner Trader Mistakesby Mansi Dandekar Financial Blogger
Starting to jump into the forex world is an
interesting experience. But you should be vigilant to avoid risk in general, by
learning from the following five types of beginner traders' mistakes:
Lack of Capital: The lack of initial capital ownership by novice traders is a
factor in the mistakes they make, and this will also quickly "kill"
them. For this reason, many traders destroy their trading accounts during the
first month or in the early weeks.
capital can be lost and depleted, before you can even learn about the correct
trading process. In most cases, account insecurity arises from mistakes made by
novice traders, or failure to make decisions to manage funds properly.
Here are the mistakes beginner traders often do:
- Not enough knowledge and experience in the world of trading.
- Novice traders are not familiar with the principles of risk management.
- Tend to underestimate the risks in trading setup, so it is easy to fall into adverse impulsive transactions.
habit that is seen among novice traders is to use strict Stop Loss when trading
with small lots, even trading accounts with minimal funds. Please note, lots of
small trading capital is not the main source of your account destroyer, but a
strict Stop Loss. If you use a Stop Loss that is too close to the Entry, then
your position chances to close with losses will be greater and more frequent.
try to keep the funds in your trading account sufficient to anticipate changes
in market conditions. This will provide the flexibility needed in making
Overtrading: Overtrading is a condition when you open a position with a large
size consisting of several lots, with the hope to get the maximum profit. Yet
if you look at the character of the forex market in general, you can easily
lose half or even all of your capital if you apply this method.
can also be caused by the following things:
- Too often enter the market.
- Trying many positions at once is a cause of overtrading
- Over-analyzing market activity and accommodating too much information from news or technical indicators. This is also the fault of the novice trader who often plunges into large losses.
- Lack of knowledge about the principles of money management.
make money management rules and obey the principles. The capital you use for
trading is your medium to get more profit, so treat the capital well. Your
responsibility certainly protects these funds. If funds are often lost, the
possibility to get profits will also be smaller.
Trading Without Planning: Start trading without concrete planning, just like you give money or funds free of charge to the market because the market will be very easy to take advantage of traders who do not think of planning strategies properly and according to needs. Control the desire to trade spontaneously and trial and error, without referring to the risk management plan or Currency Tips. But if you already have a strong belief, then please do it.
hard is the key so that your future trading planning is more mature. So, you
should set a plan to determine when to install Stop Loss and when the right
time to take profit.
Trading Without Stop-Loss: Trading without Stop Loss, whether realized or not
is mostly done by novice traders. Though installing Stop Loss is one of the
features needed by traders, so they can control losses when prices move against
trading positions. Stop Loss itself can be interpreted as the lowest price
limit value, which is determined to limit losses.
price movements touch this value, it will automatically close your order or
Overleveraging: Overleveraging is a factor that causes traders to lose a lot
because they tend not to pay attention to leverage in the trading process. The
concept of leverage does have two different sides, which can be very
profitable, but on the other hand, it can be very detrimental.
itself is trading using a position size that is too large compared to the
available margin. Whether we realize it or not, the risk of Overleveraging
often strikes beginners who wish to get rich quick from trading.
Created on Sep 9th 2019 07:45. Viewed 527 times.