Common mistakes of the trader
Many novice traders enter the market with very high expectations, but quickly find that, in fact, making money is not so easy. For some, this realization can lead to a real shock. Especially because there are not so many activities in the world that nourish human emotions as much as trade.
In truth, most professional traders from Wall Street, according to trading experts, made a lot of mistakes in their time. The key to their success, however, was that professionals learn from their mistakes and learn to minimize them in the future.
Ten trader’s mistakes
The following article considers 10 most common mistakes made by active stock traders.
1. Lack of a clear goal
It is impossible to conduct effective trade, being guided only by one desire to earn money. From the very beginning, it is necessary to determine what the money will go for, what risks the trader is ready for, what is the maximum amount of losses and profits the investor allows.
2. Disorganized trading
This is the most common mistake not only of beginners but also experienced traders. The insidiousness of this problem lies in the fact that for some time such trading allows to earn, but after the trader feels much greater losses. It makes no sense to open a position if the exact time of its closing is not determined, experts say.
3. Ignorance of own trading system
It is pointless to use a trading system and not know its pitfalls. It should work for the trader and only this way. Every step of the trader should be considered and obvious to him because of his system. Even in the darkest periods, a professional trader knows what will follow.
4. The inability to stop
The stupid and poor merchant is the one who can’t stop. Such trade harms only himself, because no one can determine how an open position will behave if it is not closed on time.
5. Fear of closing a losing position
Often it is holding such a position leads to the greatest losses. You should not be greedy in trade. Losses should be closed, anyway. They after will be blocked by profit, experts claim.
6. Fear of closing a profitable position
Another mistake is the expectation of bigger profit. The trader has expected 5% of income, but does not hurry to close the position, hoping for 7%. In the end, it is good if he remains with 3%.
7. Inability to control the account
Before opening a position, the trader needs to know what his account will be like if the position he opens brings a loss. The habit of doing this until the opening of a position can protect against unprofitable, erroneous, and sometimes adventurous trading transactions that ruin the trading account. Therefore, it is necessary to control the account before and after the transaction, repeat these actions from day to day.
8. Trading without a diary
One of the best trading habits is keeping a diary. Perhaps it seems a trifle to a beginner, but professionals would not refuse their diary for any money.
9. Trading on emotions
You shouldn’t mix money with emotions. Any emotional ups must be perceived separately from the trade. Lovesickness or grief affect the sober ability of the trader and not in the best way.
Self-confidence can not be a hindrance, but if it is too much, it can play a cruel joke with the merchant. Modesty not only adorns the person, but reduces the risks of the trader and investor. Self-confidence is necessary for success, but arrogance is not. The feeling that “you are above the world ” is the main feature of arrogance. Often arrogance and boastfulness lead to the crash.