Trading and trading may be money making, but it is by no means easy. Novice traders who enter the market usually only see that the trades are half-full and money-making, and because of the initial excitement, they do not care about the route. But immediately after starting work, the market severely punishes these people for this fatal mistake.
Every trader can take this wrong path once and get acquainted with market violence or know these mistakes and how to avoid them before entering the market and suffering heavy losses. an essay The following will help you recognize these mistakes and avoid them as much as possible. This article is published on the TradeSite website.
1. Be serious about trading
If you aspire to be a professional trader, you need to trade as seriously as you need to. You can not become a billionaire with a routine working hours from 9 am to 5 pm. Make sure you pay attention to your priorities and keep your daily activities in line with those priorities.
۲. Avoid shortcuts
If something looks great, it usually does, and there is no way to get it other than to take the time.
There is no quick way to get rich and all the possible shortcuts may end up costing you much more time and money.
3. Give yourself at least five years
You will not become a profitable trader in a few weeks or months. According to the experience of the great traders, it takes years for a person to acquire the skills necessary for profitable trading in the long run.
The skills required are not just technical skills for reading charts and technical analysis. More importantly, how do you deal with problems, how do you adapt to ever-changing market conditions, and how do you work on your mindset?
4. Review and analyze your previous trades
There is almost no profit trader who does not evaluate their previous trades. Do you remember the details of your previous 10 trades?
How do you expect to learn from your mistakes when you have no way of remembering your mistakes? You need to review and analyze all your previous transactions to see which parts of your business are doing well and which parts are flawed. If you are serious about trading, it is important to have a notebook to record the history of all transactions.
5. Do not take more than 3. Risk
During trading, back-to-back losses will occur. So plan your trades according to this default. For example, if you lose in 4 back-to-back trades in which you have invested a lot of money, your account will incur significant losses.
Before you start trading, make sure you have clear rules for estimating the amount of capital you want to invest in the trade. Note that if you lose 10% of your capital in one trade, you can not recover your previous capital with 10% profit! See the table below for more details.
|Loss rate in trading||The amount of profit required to recover the main asset|
6. Do not jump from branch to branch
Changing the trading system, or so-called jumping from branch to branch, is one of the worst mistakes a trader can make. There is no specific trading system that prints money for you from day one to infinity.
Instead, learn to deal with the shortcomings of your current trading system. Learn how to reduce your loss-making trades and how not to close your lucrative trades quickly and allow them to maximize profits. Learn how to deal with losses; Because if there is one thing that is definitive in trading, it is that the best traders are always at a loss.
7. Have a trading checklist
If you have read The Market Wizard by Marty Schwartz, you will realize the great importance of the checklist.
Checklists are great for reducing errors and having a more objective trading process. Before you click the Buy or Sell button, review your checklist where you wrote down all your trading rules to make sure you did not miss anything.
8. Schedule all transactions in advance
You need to plan your transactions in advance before you get to the checklist. Every morning, check the currency pairs you are looking for to find potential entry opportunities that day. Set price alarms for your target pairs, update your technical analysis, and use “if this… then…” scenarios for your trading ideas. Then sit back and see if the price does what you need it to do to complete your trading plan.
9. Be responsible
Whatever happens during the trade, you are fully responsible for it. If something goes wrong, do not blame your broker, stock market, news, or spouse! You are the only one to blame.
Such an attitude empowers you, because you have control over the trade and you can change the situation. Blaming external conditions deprives you of this power.
10. Enjoy trading
More important than any person’s financial capital is his mental and emotional capital. Most traders give up trading forever if they lose that capital.
Repeating similar mistakes, not seeing progress at work, and losing capital over the years can be frustrating. Therefore, adhere to all the principles stated in this article and allow these principles to guide you in the path of trading.