Lack of Education. Lack of Patience. Inconsistency. Not following Systems. Searching for the Perfect System. All of these are mistakes found among new traders.
Let’s look at an analogy of learning to play golf. If you want to learn to play golf, you have to learn how to use the clubs. You don’t want to just look at the clubs and choose one you think is pretty, and then use it on all 18 holes! You learn when to use which club for which hole. You learn which length and style and condition i.e., course, weather, etc., and it cannot be learned in a 10-minute video! There’s a job for each tool, and a tool for each job. You have to learn how to use and master each one for each job.
It is the same for trading. There are many things to learn and master. If you realize the mistakes other traders make, and determine ways so that you will not make the same mistakes, you will come out ahead. A great way to practice and learn this skill is to open a demo account using binary options where your trade risk and profit are defined.
A big mistake is Inconsistency- Not following a system. Look at the system you are using. As a trader, you may say you follow your system but you miss a trade; you hesitated on a winning trade. Maybe you didn’t feel comfortable, or you got in too early. The system may be working, but the trader is not working it. To be consistent, when the rules line up, BOOM! You are taking the trade. Don’t pick and choose. Murphy’s Law says if you pick and choose, you are going to choose the losers.
As a new trader or even an educated trader, you may be trying to find the Holy Grail-– the one system that will profit 100 percent of the time and never lose. There is no such thing! If anyone tells you that they never lose a trade, they are lying to you. If they tell you that their software never loses, they are lying to you. You may find that you try a system, and have a couple of losses in a couple of days, and decide that you don’t like that system, so you move on to another system. The same thing happens, so you move on again. You have to realize that having losses is part of trading. You have to manage those losses. Learn to read the market conditions. Have a good risk/reward ratio. Understand the basics of trading and actually learn how to trade. Consider limited risk products such as binary options where demo accounts are available that can help build understanding for real trading.
As mentioned in another article, education is extremely important. In fact, the longest path to a destination is a shortcut. People spend years and thousands of dollars on college for a career. Some professionals incur a six-figure student-loan debt. A trading career can potentially reap the same income. Why wouldn’t you spend some time investing in yourself by learning how to trade? Take the time to demo or trade. You don’t know what you don’t know. Ask questions in order to learn more. Don’t be afraid.
Learning to trade is an ongoing process. It requires patience, practice and consistency, as well as risk management, as you further your education. Who knows, it may lead to a valuable career.