Do you know the key reason for which the retail traders are losing money? Those who are new to the trading profession might not understand the complex nature of the market. They will start to trade the market with real money and eventually blow up the trading account.
Being a new trader it’s very normal to make a mistake but if you keep doing the same mistake again and again, trading is not the right profession for you. You have to keep on learning new things from your trading mistake and only then you can become a better trader.
There are four common mistakes you should avoid at any cost. These are –
- Overtrading the market
- Taking high risk
- Using a complex system
- Relying on emotions
#1. Overtrading the Market
You can’t make a huge profit from this market by trading more. You have to rely on high-quality trade execution. For that, you must analyze the market data in the daily or weekly time frame.
Some of you might think scalping is the easiest way to make money online. But in reality, scalping is only for experienced professionals. Being a new participant of this market, you must rely on simple logic and trade the market with an extreme level of discipline.
Make sure you are not trading the market in the lower time frame since it will force you to overtrade.
#2. Taking High Risk
As a new trader, you might not have enough knowledge about the importance of risk management policy. For this very reason, the smart traders always suggest new traders use the free Forex demo account.
Demo trade the market for a few months and you will understand the associated risk factors in trading. Never think you can change your life without doing the proper market analysis. Consider trading as your business and you will eventually become a successful trader.
Think of the long term goals and you can easily change your life without having any trouble. Limit your risk exposure in every possible way to protect your trading capital.
#3. Using a Complex System
You don’t have to create a complex trading system to make a profit from this market. Try to focus on simple trend trading system to become better at trading. Learn about the Japanese candlestick pattern and focus on long term goals.
Never think you can change your life without having a precise knowledge of this market. Being a new trader in the Forex market, you need to simplify the complex task. Rely on simple logic and simple way to make money online.
Start using the price action trading strategy and trade the market with the trend. If required, use the Fibonacci retracement tools since it will provide you the exact entry point. Though the system is extremely simple and profitable, you should never risk more than 2% of your account balance.
#4. Relying on Emotions
The new traders don’t have any control over their emotions. They are always taking a huge risk in each trade and losing a big portion of their investment. To protect your trading capital, you must trade the market with proper reason.
Never think you can win big trades by taking excessive risk in each trade. Try to understand the importance of money management and you will be to protect your trading capital.
If you become emotional after losing a trade, walk away from your trading station. If necessary, talk to the professional traders so that you can develop your mentality.
Learning to lose money is one of the difficult areas for the novice trader. Once you develop your skill you will have a tough time to blow up the trading account.
Always remember, losing is nothing but a part of this profession. So, always be prepared for the worst-case scenario. Last but not least never lose confidence in trading.