Making mistakes while trading is not at all uncommon. In fact, it is an integral part of the trading process. However, when traders make mistakes over and over again, unprofitable habits might form. Traders tend to get extremely caught up in trading, which makes them forget every other aspect. Trading needs knowledge and focus along with the discipline to avoid mistakes.
Here are the top 5 trading mistakes that need to be avoided.
Not having a stop loss
Any unexpected world news, a collapse in the market, or even a lousy internet connection might result in an unwanted loss. However, if you have a stop loss in place, you can stay prepared for this loss. When trading, it is suggested that you constantly expect the unexpected.
Having a stop loss will lower the stress while trading, as you will be prepared mentally to lose a certain percentage. Even expert traders have a stop loss in place.
Not doing an analysis post-trading
It is significant to understand that professional traders do not take a back seat as soon as their trading session is over. Instead, they keep analyzing the trades, go by the trade plan, prepare a stop loss for the next trade, and start planning for a fresh day.
The post-trading analysis is significant to understand the market, the risks, the profits, and everything associated, as a trader. Most traders make this mistake, and this should immediately be stopped.
Purchasing stocks without a plan
New traders typically enter trades with the hope that the price will eventually increase. However, expert traders know that this does not happen. It has also been observed that even when the trade moves against them, they will allow emotions to take over them. They will keep believing that the price will increase.
Therefore, when entering a trade, you need to understand the trade chart to see whether you will go short or long with the trade, the price targets, and the money you want to risk. As soon as you decipher these, you can easily set a plan with the proper entry-exit points. Choose the right broker to avoid this mistake by going through the forex broker list.
Purchasing stocks that have no volume
Despite getting information about the price and the volume of stock, beginner traders tend to completely ignore the volume, which is a huge mistake. Always remember that volume will validate the price. If you invest in high leverage forex, you can be assured that both the volume and price will be in sync with one another.
Therefore, if a stock is 10% up and the volume traded is only 5000, avoid this trap.
Trusting wrong stock promoters
Understand that trusting a wrong stock promoter will drain money off your account. Trusting the right hotforex broker will help you get a clear idea of the stock market. Also, you will know how to judge a stock and understand the ideal risk management practices. The right broker will help in upping your trading game.
As a new trader, making mistakes is inevitable. However, make sure that you follow the footsteps of professional traders to avoid these mistakes.
Disclaimer: This content does not necessarily represent the views of IWB.