 Welcome to this short video on the five common trading mistakes people make when they first start trading on the financial markets. My name is Rhino Donio, I'm the head of product development here at CMC Markets and we're going to show you some of the different tools that you can use to minimize those mistakes. So when you open up a trading platform there's a huge amount of information that you can use to analyze the markets. So the first mistake clients make is that they don't have a trading plan. So they come onto the markets, they have a look at what the price action is doing and they either just place or buy a sell on a hunch. So one of the things that we suggest is potentially to use a number of these tools to improve your trading strategy. So if you look at the platform you can see straight away that there's a number of different tools you can use. We've got the Reuters news calendar, we've got the charting package which has got an extensive range of technical indicators, drawer tools. Down the bottom you've got there a economic calendar. So when economic events are being announced there's a date and time generally and you can then analyze what that particular event such as GDP or consumer price index, inflation, how that's going to impact the particular markets that you're trading. So you can use the economic calendar. You've also got access to Morningstar equity research reports. So these reports based on the different markets around the world they'll give you details about what the financials have been for the last 10 years and you've got access to that directly within the trading platform. So it's important to start your trading journey by you know starting small. Try and figure out one particular market that you're interested in. Learn how that market actually reacts to certain news events and how it trends and then start with that as your base and start to analyze the markets and get a trading plan set up for that. The second common mistake is around money management. Money management is really important when trading the financial markets. The first decision you need to make is how much are you willing to invest in each individual trade? So you might put a thousand pounds or five thousand pounds into your trading account. How much do you allocate into each individual position? Do you allocate five percent or ten percent? It is all really up to you as an individual to decide what the appropriate amount is but have that as a base. So when you do start to enter a trade you look at the amount you think you should risk and then place that amount as your as your initial capital. The second part of that money management comes down to placing risk management orders. So within any trading platform you've got access to different tools such as stop losses and take profits that can help you limit your risk but also take profit when the market reaches a certain value. So let's have a look at a position on the SPX 500. So if we were going to place a trade on this particular product if we bring up the order ticket you'll notice that there's a number of tools available to you within that ticket. Firstly we need to decide how much we want to place. So let's just start off small and we'll do a trade of one unit on the SPX 500. Where the risk management levels come into it is in relation to the stop loss and the take profit levels. So you'll see here that you've got a stop loss and take profit areas of the order ticket. That sets a level that we want to get out at to limit losses and also a level above the current market price where we want to take some profit. Risk management is about controlling your losses while letting your profits run. So generally people look at what we call the risk to reward ratio. So we want to risk a certain amount but we want to make sure that the reward is beneficial. So quite often what people look at is let's say a 2 to 1 or a 3 to 1 risk to reward ratio and what that means is if I'm willing to risk 50 I want to at least make a hundred pounds on the upside to make that trade worth it. That's what we call a 2 to 1 risk to reward. Now on the chart you'll see that the take profit and stop loss levels are there. So if I drag the stop loss level down what we want to do with take profits and stop losses also is use historical key levels to determine where that take profit or stop loss will go. Because what we're suggesting is that if we put a level or a stop loss below has the market reached that before? If it has then potentially it might reach it again so we might want to place the stop loss just below. With the take profit the same thing applies. If we actually start to see that we've got a resistance level here the markets reach this level before we might want to put the take profit level just below that so that we've got a higher percentage chance of that being executed. But again make sure that you're putting your stop losses and take profit levels on to manage your risk but also do it in a way that you're getting a good risk to reward ratio. The third most common mistake that I've come across is around about your take profits and stop loss levels. When clients are actually looking at a particular trade and they've been in it for a while they'll start to see the market go down in value and they'll sort of say well actually maybe I'll move my stop loss lower. The reason for that is that people don't like to be wrong. What we should be doing as traders is sticking to our strategy. If our stop loss was a set at a key particular level then we get out at that level and we move on to the next particular trade. Clients are very good at letting their losses run so they continue to run into bigger and bigger losses but when they start making a profit they're able to cut that way too early. They start seeing a profit and they think the movement is coming back again they'll get out of the trade and then of course the strategy is correct and the market goes up in value and would have hit your traditional take profit level. So the moral of it is to make sure that you cut your losses but let your profits run. The fourth most common trading mistake is what we call over trading. It's very easy when you've got markets that are open 24 hours a day to be looking and monitoring the markets and trying to find a trading opportunity but sometimes there just isn't a trading opportunity for you especially in the markets that you're interested in. So it's really important not to trade when there's no signals there available. So stick with your trading plan make sure that there's a reason for entering a trade and only place a trade once there is because quite often when you get into a trade purely because of boredom or you know you just want the excitement of getting a trade you run the risk of it potentially being a losing trade. So again have some patience stick with your strategy and make sure that you follow through. The fifth most common trading mistake for me is over leveraging. It's basically when you're trading financial markets such through CFDs or spread betting you're able to take out a much larger position in the amount of money that you've got in your account. So you only have to put in a small amount of your own capital to take out a much larger position. So it's tempting to get into a trade that's much bigger than what you can afford. So again when you first start trading start out small you can trade a number of different products with a fractional amount. So instead of doing one unit you could potentially do point one unit for example. If you have a look at for example on the US 30 so if we bring up the order ticket you can see here if you put in the unit's value you can actually lower it to the point one unit value. Here we only have to put up 105 pounds worth of margin but we're actually taking out a 2100 pound position. So again start off small get familiar with the markets and then as you become successful then you can start ramping up your trading. So that's the five most common trading mistakes. Make sure that you start with a trading plan. Manage your risk management so setting those stop losses and take profits making sure you realize how much money you should invest in each individual trade. Don't get bored and over trade make sure that there's a reason for getting into that particular trade and make sure that you learn about the markets that you're trading. Make sure you understand what it is that actually affects that market whether or not it's an economic event whether or not it's financial statements coming out for particular companies. Really understand that market and know when it potentially could move and also start to use some of the charting package. Make sure you try and look at primary and secondary indicators such as support and resistance levels, MACDs, RSI's, find the ones that work best for you and then start to apply those to your strategy and see how you go. But you've got access to a demo account try it out and see how you go.