What are the common trading mistakes which every beginner should avoid?
Trading without first finding a consistently profitable strategy.
Taking too much risk per trade.
Buying only because price has been falling, selling only because price has been rising.
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i agree that’s top of the list
(and i’d add “not developing the requisite skills for being able to tell reliably whether you have a consistently profitable strategy”)
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Entering a trade without quantifying your exit plan, or
Changing your mind during a trade and changing your exit plan
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We all have to be adaptable in today’s political covid environment. To watch a losing trade reach 75% to the stop loss and then watch it hit the 100% is bad money management. It should be cut - quickly.
Why?
Mathematically, the likelihood is 25% of it reversing back to break even zero, but 75% more likely to reach the S/L. There’s always a better trade awaiting.
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That’s means you are risking too much… as a trader you should have the discipline to see a trade through…that is why you should backtest your strategy and have a good risk and money management…if you are moving your stop loss around or getting out of trade early then you should go back to a demo account and while at it learn how to control your emotions
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Trading with a live account,start with a demo account until you are confident in your skill
Thinking that you can just place a trade and hope it goes your way
Not having a trading plan
Being emotional with your trade
Not learning about trade psychology
Not having a mentor or someone who has done it before
Thinking forex is easy money
Not having patience
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Sorry - don’t agree, I’m saving money in that I do see the trade through, but I do it with less risk of higher loss attached. That’s money management in action. I only aim to move my S/L towards the price to breakeven point. Then I can’t lose.
I get out early when I recognise a losing trade - it’s clear if you know what you’re looking for. That’s my edge. And I have no emotional bias about cutting losses because I practised doing it for 8 months - others do not like to cut because they cannot accept they got it wrong. Human behaviour. My emotional psychological mindset is bulletproof on discipline, patience and loss management, IMO.
Tell me, has it ever been explained to you what happens to a trade on entry? From your post above there is no indication except to see a trade through, even if it’s likely to cost you in the long term. My understanding of that process reduces the risk of losing big.
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I disagree wholeheartedly with you,first I see everything I do through and we all knowing how volatile and ever changing the market…We all have be a victim of a trade almost reach your stop loss we freaked out and took losses only for it to kick back up and reach profit target…the only reason I didn’t freak out and get out of the trade is because I am disciplined trade and I have prepared for either scenario and I don’t risk whatever I am not comfortable to lose… you are so focused on not losing that you end up not winning…you should try being disciplined you might see a profitable change in your trade
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Most common mistakes are very little preparation and Being emotional for money.
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Hi corbinknox,
I can see the merits of your plan, but I also agree with @steve369. Most of my trades are “set and forget” with a rigid exit plan that I don’t interfere with. They tend to be in the timeframe nowadays of days, weeks or even months. However I have recently had a few speculative trades based on daily price action. For this type of trade, when I am watching price action real time, I agree entirely with @steve369. Perhaps the difference is in the overall strategy that includes an expectation of time frame during which the market is expected to prove you right or wrong. If you choose your entry criteria to a fixed plan (eg enter on next 4 hour candle) but immediate price action does not confirm that your direction was right, in this case I would cut the losses by exiting the trade prematurely. I saw this in spectacular fashion yesterday with an XRP /BTC trade I was following with a great outcome. Flexibility when it is appropriate and rigidity when it is appropriate. You can have both mindsets provided you accept this “strange paradox”. It’s the quantum part of the brain that can either be used - consciously with consequences, or subconsciously if you feel “in the zone”
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1.) Choosing the wrong broker
2.) Overleveraging their account
3.) Risking too much money on each trade
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Jumping into live trading without experiencing demo trading is the biggest mistake which beginners should avoid.
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Yep…it is all about being able to recognise the situations when a certain strategy is most likely to work…
…that is what makes the trader.
…otherwise, most strategies fail in most market circumstances, most of the time.
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In case anyone’s interested, we actually have a lesson on this!
The 5 Os if anyone’s curious:
- Overconfidence
- Overtrading
- Overleveraging
- Overexposure
- Overriding Stop Losses
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Not having a defined clear structure to follow. If you have this, it means you have a trading system to follow and it eliminates all bad psychology because all you need to do is just following your system. Of course, your system needs to be profitable too.
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New traders should avoid scam trading programs.
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I have seen many traders just blindly over trading in the market, that’s a big big mistake for sure.
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The most common mistake that I have seen traders making is setting unrealistic goals. Just by seeing how other traders are doing in the market, newbies set their expectations and don’t even try to work smart. This is very wrong because it is your trading journey and it will be different from other traders.
The most common trading mistake that I have seen traders make is not being able to control their emotions. Traders who let their emotions come their way of trading are often the ones who struggle to make profits. The more you can control your emotions, the better you become at trading.
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