10 Mistakes Beginners Make When Start Trading

If you are just starting out in trading, then it should be extremely interesting and exciting for you, but also very disturbing and scary sometimes. Financial markets nowadays offer truly endless opportunities, but without proper preparation, you are likely to fall victim to common traps that lead to unnecessary losses and that is why it is important to prepare well before starting.

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An important first step for a novice trader is to develop a well-defined strategy, which should first be studied on the JM. This includes knowing when to open and exit positions, setting realistic goals, and understanding risk management. It is important for you to realize the importance of a structured approach in the early stages, as it reduces dependence on emotions and helps you stay consistent. In this article, we will look at ten common mistakes that novice traders make and look at how to avoid them.

1. Lack of a Trading Strategy

A trading strategy is a guide that allows you to find out when to enter a position, when to exit, where to place a stop order, and what your goals are. It will let you know when to enter a position and where to place a stop loss according to your money management. One trade without using a stop loss can be fatal for your capital.

2. Ignoring Trader Psychology

Psychology is the main factor that should not be neglected because it will allow you to survive in the long run. If we don't take psychology into account, we will end up emotionally overwhelmed. You should not try to make money, you should follow your trading plan literally and have a daily goal in pips, not euros, because psychologically it will be much more difficult.

3. Dependence on the Analysis of Other Traders

Many novice traders persistently follow the analysis of other traders. You have the right to draw inspiration from it to complete your own but do not forget that this analysis must match your trading plan. There is no point in copying a trader exactly because each trader has his own strategy, you will have to find your own, otherwise you will never advance. If you depend on the signals of other traders, you will never know how to analyze and you will never have your own.

4. Excessive Trading

Sometimes it is very difficult to stop a trading session, especially when it is unprofitable. In general, the overtrading phase is the beginning of an already unprofitable day. Psychologically, you have a very negative vision of this day and it is hoped that takes over, you will be ready to do anything to "remake" yourself, so the day of overtrading begins.

To avoid over-trading, it is recommended:

5. Not Accepting Your Mistakes

Not admitting that you are wrong means postponing your stop loss, not placing it, and not withdrawing it, it means refusing to admit that your scenario will not come true. In trading, it is important not to be right or wrong, but to come to a positive result.

6. Lack of Focus on Multiple Assets and Misunderstanding of the Market

It is important to specialize in one or two assets, because, as in any other profession, you will succeed in the stock market only when you know your field of activity very well. Many novice traders start working in the markets with 5-10 assets. Since trading platforms offer the opportunity to trade many assets (CFDs on stocks, indices, commodities currency pairs, etc.), novice traders often enter into transactions on several assets at the same time. Unfortunately, they do not realize that every market, every index, and every currency has its own characteristics and sometimes very different risks.

7. Lack of Money Management

Money management is the art of managing your capital by applying rigorous risk management to it. You should consider your trading capital as your business, which you should pamper every day. Because the more capital you have, the more you will be able to make a significant profit. It is necessary to set the maximum daily loss in euros or points. This will allow you to fully control your losses and there will be no surprises.

8. Trading Against the Trend

Many novice traders trade against the trend and therefore struggle against the market. However, the trend in the asset is much more likely to persist than to reverse. Since the trend continues X times but reverses only once, this is statistically proven.

9. Thinking That the Market Is Against You

Often, when a novice trader loses, he first blames the market: "The market is against me, it's impossible" or "I'm really unlucky." But all these remarks come from your "EGO", which does not accept the fact that you may have been mistaken in your analysis or mismanaged your emotions, etc. Always remember that the market is always right.

10. Demo Trading for a Long Time

It is wise to start trading on a demo account in order to understand, analyze charts, make a trading plan, and learn how to stick to it. But the mistake that too many newbies make is that they stay there too long. Because if you have been profitable for 3 years in the demo version, it means absolutely nothing in real life. In the demo version, you don't have this problem because it's not your money, you can let your profits and losses grow, and nothing really affects your emotions. In real life, everything is different because you invest your own money.

Conclusion

In conclusion, to go from a beginner trader to a profitable long-term trader, you should not hide your face and believe that theoretical training will allow you to achieve instant success. You must realize that becoming a Trader is a long—term job and that you will have to work hard for years to gain experience and even get to know yourself.