Knowledge is power, especially when it comes to trading. However, some traders feel that knowing just enough is all that is needed. This is often a costly mistake.
Let’s take a look at the three common mistakes traders make.
1. Lack of risk management
When you’re excited about something, you often go all in without a thought of control or thinking about your next move. Most new traders are usually very optimistic about the potential profit they’re about to make but without proper risk management protocols. Implementing a stop loss could help you control the risk on the trade you make (or perhaps even a daily stop loss limit).
2. No strategy in place
Again, eagerness could get the better of you. Jumping in without a plan could be costly, and you’re likely never to see any profit. What should a strategy include? Know how much you are willing to risk in a trade. Also, work out an approach based on how many times you’ll trade per day.
Be careful of what you find on the internet. You need to find software that is reliable and something that doesn’t crash all the time. Your best bet is to read reviews, talk to fellow traders and ask about their recommendations, or create a demo account to test out the software.
4. Bonus: Your personality
The fact that you can trade anytime, anywhere is a blessing and a curse. You have the freedom to choose when, but for some, it may get in the way of their normal routine, i.e. family time and work. Self-assessment is quite handy here. Know what situation triggers your stress, and what will help you keep you focused.
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