Fatal mistakes of novice traders

Fatal mistakes of novice traders

Fatal mistakes of novice traders

Today we will look at the main fatal mistakes of novice traders in the Forex market. This topic is quite relevant and you should not neglect its basics in trading. So, what is the basis of our trading, namely, successful trading?

Psychology (85% success rate)
Trading system (10% success rate)
Money management (MM) (5% success rate)

As You can see, the psychology of trading plays an important role and it determines how much you can control yourself in making important decisions when trading on the market. Most of us, starting to trade on a real account, initially do not think about how to open a position, how much, under what conditions; how to conduct it, close it, open new ones again. The trouble is that a novice trader does not have a clear plan of action, which sometimes leads to a fatal outcome or, as many people call it, repentance, when the lost Deposit can not be returned.

Each individual market, whether it is Forex, stock market, futures or options market, has its own specifics. Similarly, each trading instrument has its own liquidity, volatility, spread, swaps or commissions. Therefore, it is important for each trading strategy to test it not on one trading instrument to loudly declare the performance of Your vehicle, but on each, since you will notice the difference immediately regarding drawdowns and profits.

So, let's highlight the most basic mistakes of novice traders:

poor use of money management rules or complete disregard. Usually, the risk per trade is overestimated by more than 5%, when the optimal risk is from 0.5 to 2%. Of course, everything also depends on the trader's vehicle itself, but according to the General rules of the classic 1% risk per trade works perfectly and it is psychologically acceptable for a trader to sit out possible drawdowns. It is a comfortable sitting out of the drawdown (this is sometimes necessary when the market price is given the right to breathe, so that Your stop loss is not immediately cut off) that is psychologically easier to bear than the completely opposite scenario; either a hard fixed stop loss will facilitate this fate and will not cause absolutely no psychological burden, because an experienced trader always knows the statistical advantage of his vehicle. Do not try to recoup after losses, because many people start using the famous martingale (a significant increase in the volume of each subsequent order after receiving a stop loss or falling into a deep drawdown) against the trend and burn all their savings in an instant.
trading without using the rules of the trading system. The vehicle must contain Your plan for actions-from opening a deal, conducting it, and up to closing it. Without a trading plan, your trading will be completely NULLIFIED. You must evaluate each planned trade on a 10-point scale (or whatever you want, but the rating should be), so you will protect yourself from choosing false trades with the worst statistical advantage. To put it more precisely, every day you should see a so-called checklist, according to which each of Your trades will be evaluated on an n-point scale, which will tell you whether to choose a trade or skip it and switch to another trading instrument. Another problem for novice traders here is the complexity of the rules of the vehicle (at the very beginning, at the start of the study, many began to study the trade itself according to classical publications, as a result, most of them had a lot of "porridge" in their heads, so the best option is to find an experienced practitioner, teacher, Guru who will help You grow as a trader), First of all, you should be comfortable to work, easy, without any load. You will not sit at the monitor, making markup all 14 hours a day, and then when is it really possible to place orders on the market? Simplify your vehicles and make personal trading clear, accessible, and efficient.
your personal internal state (psychological tension, greed, excitement, banal fatigue, etc., can be repeated indefinitely), which will actually 100% break Your entire trading plan and MM. For comparison, as an ideal option-the same trading with expert advisors (automatic trading systems) has no equal in this regard, but we are all human beings and the human factor, our weaknesses are inherent in everyone. Keeping a transaction log is very important in this regard, which can help a novice trader to stop in time and return to favorable work scenarios if something went wrong in the trade. Plan your work schedule by time, how you will dress, even what chair you will sit in front of the terminal with 2 or 12 monitors – all this in some way creates the working atmosphere in which You will be comfortable; You will not be distracted by all sorts of small things, especially if you work from home. You are your own Director and the local rules are only Yours. How you put yourself, plan everything, whether you will follow all the trading plans-this will depend not only on Your psychological state, but also on the final result of your personal work.
an important aspect also applies to the choice of a dealing center or clearing broker. Do not chase the best trading conditions (minimum spreads, instant execution without requotes, etc.), choose time-tested, but not new, "grown mushrooms" out of nowhere. Read reviews on third-party resources experienced and draw conclusions, open an account, invest or continue the search. The money is yours personally and you should not give it to dubious dealing companies.
do not invest all your savings, if You have an amount that you can safely lose, then go ahead. Most people lose money because of greed, mortgage real estate and then just pray for the price, and the market likes such people. When you lose money, you don't blame yourself, but the organization where the account was opened. So always be aware of what you are going to do. Plan everything to the smallest detail and do not chase big money, the market will not disappear, supply and demand will be constant, because this is Finance and there will always be interest in this area!

In summary, be diligent in the work, practice, filling his hand in history (a good option to use in this regard software products of any analogs of Forex tester, where a novice trader will be able to make a reality of all their transactions from "A" to "z" on the history with your hands, not just run of the algorithm as integrated in the terminals, testers), control and its internal state - and in the end You will be rewarded!

Learning from professionals is one of the ways to avoid mistakes that are typical for starting a trade. At the Forex Academy, only experienced traders work with you, who are ready to pass on their knowledge and skills to those who want to. At the same time, each student has an individual approach to understand what mistakes prevent them from achieving success. Today You can achieve the financial independence that everyone dreams of. And to do this, just click on the button below and leave your request.

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