6 min read
How to manage mistakes in trading? Some traders learn it the hard way, through losing money and repeating the same mistakes over and over again. Others prefer to be cautious and avoid unnecessary blunders if they can be prevented. Which kind of a trader are you? If you prefer learning from other people’s mistakes, this checklist is for you. We have gathered some of the most frequent mistakes that novice traders make.
1. Ignoring the big picture
If you have chosen a certain asset to trade, be it a currency pair, a stock or a cryptocurrency, it is important to see the big picture of what influences the price of this particular asset. Sure, using technical indicators is great and it may be quite accurate, however, traders that want to improve need to learn to evaluate the market as a whole. How does the price of gold correlate with the US dollar? What assets will get affected and how during the presidential election in the United States? All these questions have quite simple answers and a trader’s job is to educate themselves on the economic factors.
2. Immediately trading with real funds
Though the main goal of any trader is the outcome of trades, sometimes it means slowing down and not trading with real money, leaving time to practice first. Even when it seems that you have thought everything through and you have the ultimate trading strategy, trying it out on the Practice balance won’t hurt. It may help find some weak spots, correct any imperfections and get truly prepared for trading with real money.
3. Not setting a limit
Many novice traders approach trading without any plan. They are not sure how it works or what to expect, they just want to earn money. Not only is this approach unrealistic, but it is also harmful because a trader ends up having negative outcomes constantly. The sequence is simple: a trader finds an asset they like and starts opening a deal after deal, not collecting any useful data. When the outcome of a trade is the desired one, they are happy. When the outcome is negative, it makes them mad and they invest again.
Such a vicious cycle is not uncommon, though it is not hard to break. Setting an investment limit or a sequence restriction might be a good tool for self-control.
4. Not utilizing indicators
Technical indicators are not the ultimate secret to success, but they may be incredibly useful. Indicators help a trader to evaluate the past performance of the asset and make certain assumptions about the future movement. There is no indicator that would always give 100% accurate signals, however, it is a good aid to any trading strategy. Using a combination of compatible indicators together may help increase the chances of a correct prediction.
5. Trusting others with your deals
The last but not least important point is that many traders prefer to hire or make an agreement with someone who would trade on their behalf. Not only is it completely forbidden on the IQ Option platform (here, every trader must trade for themselves only), but it can be dangerous for such hirers. There are a lot of scammers and dishonest people out there, who will simply trick you into sending them a deposit and you may never hear from them again.
In order to truly advance in trading, one has to learn and practice on their own. It is the only way to improve and waiting for someone to do it for you is quite naive.
What trading mistakes have you made in the past? How did you overcome them? Let us know about your experience in the comments below.