http://www.FapTrader.com - 3 Most Common Trading Mistakes Made by Almost All New FOREX Day Traders
Trading for a living is probably the number one reason that makes many people enter the day trading arena. Trading also offers many benefits that can never be matched by traditional nine to five jobs. But, it is also a trap that many want to be traders fall into if they come totally unprepared. Many traders make mistakes and learn from them, and then there are other traders who make the same mistakes and never learn from them. Below, we take a look at the five most common mistakes made by the novice day trader.
(1) Not Having a proper Trading Plan in place : Most people start trading without any kind of plan in place. That is a very serious mistake to make. Every business is built on and thrives on proper planning. A trader should know in advance how much risk capital they are willing to trade with. Traders must stop looking for the Holy Grail and try to get good at one or two setups and execute them religiously. Traders must plan to cut losers off quickly and hang on to winners as long as possible. By not planning their trading, traders set themselves up for failure.
(2) Failure to Preserve their Trading Capital : Trading Capital is the most essential element in the trading business. Without it one cannot trade to make the profits one wishes for. Hence, it is very critical for the day trader to preserve their trading capital. Trading Capital Preservation will ensure a trader of his or her survival in the long run. The best way a trader can do this is by taking small losses and moving on to the next trade rather than try to make up for losses in one trade.
(3) Improper Risk Management : Managing risk is the number one priority, goal and job of the successful day trader. This is done by proper position sizing. A trader must have a decent sized account to focus on and trade the instrument of his choice. This means the account should be able to withstand a number of losses in a row without wiping out the trader's account or draining the trader mentally and physically. A trader must not use up all the margin available to him or her in a single trade. And a trader must definitely avoid the trap of over-trading the account.
(4) Not having proper Discipline : Discipline is a very important virtue that needs to be possessed by all traders. It is probably the most common virtue possessed by successful day traders. Discipline can be in many forms. A trader must be disciplined in his approach to trading. Discipline starts off by having a solid plan and following that plan during live trading. A trader must have the discipline to accept losses when they come and take profits when called for in the plan. Fear and greed can cause a trader to have total disregard for discipline. Discipline is the art of dealing with the stress that comes with the loss of trading capital. It is very difficult to trade and succeed without proper discipline.
(5) Not using Trading Stops : Using proper trading stops is the key to success in trading. Trading stops go hand in hand with managing risk and capital preservation. A trading stop helps the trader get out of a losing position without thinking too much. It is a part of most execution platforms today. A trading stop tells a trader that their analysis of the market move was wrong. A trading stop can be based on the amount of money a trader is willing to pay the market to find out if he or she is right about their analysis. Having stops placed automatically helps build confidence in a trader as they know they will not have to think too much when the market moves against them by a certain amount. They know they will get taken out of the position automatically when the stop is triggered. After all, the first loss is usually the smallest loss.
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3 Most Common Trading Mistakes Made by Almost All New FOREX Day Traders
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Avoiding common trading mistakes by Brandon wendellby TradingAcademyMumbai4,116 views
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