Traders who are new to the market tend to have high expectations when it comes to the profit that they can possibly get whenever they open a position. However, this high expectation wouldn’t last for too long because they get slammed with the reality that there is no easy money in trading even if you use a powerful trading platform like MetaTrader 5. After some time, this realization becomes too discouraging, especially because there are some pursuits that gear up human emotions. Trading is often introduced as making money from home and this lures a lot of people. But when the reality hits them, they come to understand the true nature of trading, that it can be very cruel especially to those people who don’t know that it is.
Common Mistakes Encountered By Traders
Little To No Training or Preparation
When you enter the market and you deposit the capital, there is no turning back. You must be prepared for the battle. Are you? In most cases, new traders end up in the trading arena without much knowledge of what will happen and the chances of profiting from their trades. The market will not always work according to your wishes. There are times of volatility and your speculations will be doomed. But if you have knowledge about these things, you will know that you need to have a risk management strategy to deal with these volatile markets, you need a trading plan to help you decide the movements that you are going to take and money management that will help you determine your risk tolerance.
Too Many Emotions Can Ruin Your Trades
This is a very important fact – emotions can ruin even your most comprehensive trading plan. When a newbie experiences his first loss, he feels the worst regret and pain you could ever imagine especially if it’s a big loss. Traders who put their eggs in one basket are the ones who get to suffer more pain. Some might back out from trading while others stay in the battle. They come to realize that trading isn’t a simple game of luck. It requires knowledge and the right emotion. Taking in control of your emotions allows you to have a sound mind and make better decisions all the time.
Not Having A Journal
You won’t realize the importance of journaling until such time that you want to check something from your past trades. When you have a journal, it will be so much easier for you to check your previous achievements and losses. How you managed to win the trade and why you lost a supposedly great opportunity to earn profits. There are so many things in your mind to remember all the details on your trade. Therefore, you need a journal.
Not Using Stops
It is known that trading, especially CFD and Forex, has higher risks. Therefore, it is very important to use stops to limit the risks and prefer huge losses. Trading platforms like MetaTrader 5 offer stops and limit orders that will be very helpful especially to new traders.