Nasty Trading Mistakes That You Probably Make
In trading we can all make mistakes. Mostly when we just start trading we do some mistakes because we learn many things and try to use them in the right way. Even the most professional traders can make mistakes. However, it is better not to do them. Here we collected a list of 5 most common trading mistakes which beginners make. Read this article and try to avoid these mistakes in the future.
Not having a trading plan
In trading, timely preparation plays a big role. Numerous traders can’t make a good plan, which they will follow because of their lack of experience or because they are involved in trading emotionally. If you won’t have well-organized plan, your losses may highly increase. Before you open a trade you need to know the amount of money you will invest, the exit point and the maximum loss that can arise, in case your prediction was wrong. Keep in mind, that it is bad for your earnings if you have a good trading plan but you can’t follow it.
Trading Against the Trend
Imagine opening a long position when the price of the asset spontaneously begins to worsen. Basically, you are left with 3 options: close the position immediately in order to lower your losses, buy even more of this asset hoping for an approaching reversal or just wait. The second option can be called averaging down, because you lower the average price of your holdings. Adding to a losing position will work when you trade on a longer time frame. Nevertheless, if you trade on short-terms (specifically when you work with a multiplier) this strategy can quickly leave you with no money on your balance. Thus, that is the situation you possibly would like to avoid.
Failure to Use SLTP Orders
Stop-loss and take-profit orders may be a nice addition to your trading system. Take-profit can play a big role too. However, it is stop-loss which can make or break the trade. The last one can as well help you obey your trading strategy. In fact, it is sometimes difficult for traders to close trades when it is needed to and this is due to the lack of time, bad discipline or if they are too emotional when trading. In these cases an automated program, which doesn’t have any feelings, can help you close the trade when it is needed to.
Surrendering to Tilt
Your emotional state is highly important when you trade. The term ‘tilt’ comes from poker and means a state of mental confusion and due to this a person starts using bad strategies.It is commonly known that when you do something wrong many times, you won’t achieve great results. However, it is all the way around. In trading it means that you can simply lose all your money on your balance in one time. In order this doesn’t happen, a trader have to take a short break, calm down and concentrate on activities that are not related to trading.
Too much leverage
When you work with IQ Option, you can trade most of your favorite assets with a multiplier and this means that the profit you make (and the losses that arise) are multiplied by the appropriate value. Beginners often think that higher leverages will help them make more faster. However, this is not how it is. One sudden move in the wrong direction and your investment is lost. You shouldn’t rely on an impressively high multiplier (only if you are not 100% sure about the direction of the trend), as it may make it worse rather than help you earn more.
All the mistakes from this list are about how you behave towards your losses, not earnings. Of course it is crucial that your profit becomes bigger, but it is not as important as your will to close the trades unless it is too late. Even though, you probably already know what your mistakes are, it still takes some time to start completely avoiding these mistakes.
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