5 Trading Mistakes That Keep You Poor
if you have just started out in the world of trading. Whether you are trading crypto currencies, forex, the stock market or anything in between, the simple reality is that there are a lot of rules and tips that you need to follow in order to be successful. Make no mistake about it because trading is not easy. Without the right skills and knowledge, you just aren’t going to be successful. Therefore, what we are here to talk about today are the biggest trading mistakes that keep you poor.
Now there are of course tons of mistakes that traders can make, but with that being said, some trading mistakes are much worse than others. Moreover, there are many trading mistakes that all too many newbie traders commit that they don’t even realize these are mistakes that keep you poor without you even realizing it. What we are here to do today is to take a look at the biggest trading mistakes that keep you poor and that you need to avoid at all costs.
Trading Mistakes That Keep You Poor
Of course there are plenty of trading mistakes that you might make, all of which could very well keep you poor, but with that being said, today we are here to talk about the biggest trading mistakes that you absolutely need to avoid at all costs.
Using Fixed Position Sizes
When you start straining, you’re probably going to be extremely concerned with things like candle stick patterns, trading indicators, and all sorts of technical analysis tools.
With that being said, what a lot of traders do when they see something nice, or in other words, a trade that looks like it has the potential to make a good profit, is that they will just place trades without paying attention to the position size. The issue here is that if you do not size your positions properly, your wins and losses are going to be very erratic.
The most important thing that you need to do here is to adjust your position size based on your stop loss. The tighter your stop losses, the larger your position size can be without risking too much money. Learning all about position sizing is an extremely important thing and not sizing your positions properly is one of the biggest trading mistakes that all too many newbies make.
Yet another one of the biggest trading mistakes that all too many newbies make is that they chase markets. In other words, some people will see that there is a huge bullish pattern happening and that it’s already been going on for quite some time.
So people think that they should place a buy trade now so that they don’t miss out on any more of the profits. However, with that being said, as is the case, all too often the market will reverse go into a bearish mode and cause you to lose money on your buy trade.
In other words, one of the biggest trading mistakes that newbies make is to buy near the highs when they should be looking to short a trade. Markets that are already near their highs are totally exhausted and will often make pullbacks. One of the most important things to lookout for here is an area of support when the market is in an uptrend.
Hesitating to Cut Losses
Perhaps one of the most biggest and most crucial trading mistakes that newbies make is that they hesitate to cut their losses. A lot of people, when they are suffering losses, might think that the market will rebound or that there will be some kind of pullback which will then lead to them making profits. Even if the trade is currently losing.
A lot of people think that they will look really stupid or look like idiots if they sell their position now only to watch the market reverse even higher.
People end up holding onto losing trades for way too long before they end up cutting their losses, but of course by that point the losses have amounted into something quite significant. A small loss of $100 can quickly amplify into a loss of $1000 if you don’t cut your losses. As soon as you see them happening. Don’t hesitate to cut your losses.
Attempting to Average Into Losses
Yet another huge trading mistake that many newbies make is to try to average into losses. In other words, if you are suffering a losing trade, some people will attempt to buy more of that same asset with the hope that it will then increase in value.
However, this is closely related to hesitating to cut your losses, because here newbies will actually buy more of the same asset in the hopes that it will average out their losses and maybe lead to a break even. The bottom line here is that you should never average into your losers because it often snowballs into something much worse.
Getting Useless Info From Others
Yet another huge mistake that so many newbies make when trading is that they try to get their trading information from sources such as Facebook, Twitter, an random trading forums.
We know that this next statement is about to sound critical, but the fact of the matter is that most of the people that you get your information from, especially on those forums and social media platforms, are stupid and misinformed people who don’t know the first thing about trading.
Don’t go to Twitter for trading information. It’s no different than saying that it’s better to get your news from an actual news outlet rather than from a social media site. While some people using social media and who write on forums might very well be correct, the simple reality is that you have no way of knowing who is right and who is wrong.
You should never trade based on the opinion of others. You need to do your own research and analysis. Master a variety of trading techniques and learn how to use indicators so you can make your own judgments.
The Bottom Line
The bottom line here is that if you can avoid these five massive trading mistakes that ultimately newbies make, then you are well on your way to success. Of course, there is a whole lot that you need to learn in order to be a successful and profitable trader, but with that being said, if you manage to avoid the massive trading mistakes that we have talked about today, then you’re definitely on the right track.
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