Friday, 7 June 2019

Some of the Most Fatal Beginner Traders Mistakes

Getting started in the world of forex is an interesting experience. But you should be vigilant to avoid risk in general, by learning from the five types of mistakes the beginner trader follows:



1. Lack of capital
The lack of initial capital ownership of beginner traders is a factor in the mistakes they make, and it will simultaneously quickly "kill" them. For this reason, many traders destroy their trading accounts during the first month or in the initial weeks.

Trading capital can be lost and used up, even before you can learn about the correct trading process. In most cases, insecurity of accounts arises from mistakes made by beginner traders, or failure to make decisions to manage funds properly.

Here are the mistakes beginner traders often make:

Not enough to have the knowledge and experience in the world of trading.
Beginner traders are not familiar with the principles of risk management.
Tends to underestimate the risks in setup trading, so that it easily falls into adverse impulse transactions.
Another habit that is seen among novice traders is using tight Stop Loss when trading with small lots, even trading accounts with minimal funds. Keep in mind, lot or small trading capital is not the main source of destruction for your account, but a tight Stop Loss. If you use a Stop Loss that is too close to the Entry, the chances of your position being closed with losses will be greater and often.

Therefore, make sure that the funds in your trading account are always adequate to be able to anticipate changes in market conditions. This will provide the flexibility needed to make trading decisions.

Like business activities in general, you also have to ensure that trading capital is sufficient. Do not try to minimize the risk by only depositing part of the capital you have. Don't take responsibility for funding the account, and use the funds properly through good risk management.



2. Overtrading
Overtrading is a condition when you open a position with a large size consisting of several lots, hoping to get the most profit. Even if you see the character of the forex market in general, you can easily lose half or even all of the capital if you apply this method.

Overtrading can also be caused by the following:

Too often enter the market.
Trying multiple positions at once is a cause of overtrading
Over-analyzing market activities and accommodating too much information from technical news or indicators. This is also a mistake of beginner traders who often plunge into large losses.
Lack of knowledge about the principles of money management.

Then how to avoid overtrading? First, make money management rules and obey the principles. The capital you use for trading is your media to get more profit, so treat the capital well. Your responsibility certainly protects these funds. If the funds are often lost, the chances of getting profits will also be smaller.

In addition, having a trading goal can help you stay motivated and disciplined, so you can avoid the mistakes of novice traders at this time. In that case, you must remember to stay realistic and fit your current needs and conditions. If you dare to prepare large funds to trade with confidence to achieve a large target, then you must also be ready to "fail" if it is not as expected. Do not be affected by emotions for a moment.



3. Trading Without Planning
Starting trading without concrete planning, as well as you submit money or funds for free to the market, because the market will be very easy to take advantage of traders who do not think of planning strategies properly and as needed. Keep in mind, if the market tends to move against your position, when will you stop losses? Then if the market moves positively, when do you decide to take profits?

The answers to these two questions should be your reference in determining the strategic exit position. Control the desire to trade spontaneously and try, without referring to the risk management plan. But if you already have strong beliefs, then please execute them.

Working hard is the key to making your trading planning in the future more mature. So, you should set a plan to determine when to put a Stop Loss and when the right time to take profit.

4. Trading without Stop Loss
Trading without Stop Loss, whether realized or not in fact is done by many beginner traders. Though installing Stop Loss is one of the features needed by traders, so they can control losses when prices move against trading positions. Stop Loss itself can be interpreted as the lowest price limit value, which is determined to limit losses.

When the price movement touches this value, it will automatically close your order or position.

Some ways to install Stop Loss

Manual Stop Loss.
Automatic Stop Loss.
Trailing Stop


5. Overleveraging
Overleveraging is a factor that causes many traders to lose, because they tend not to pay attention to leverage in the trading process. The concept of leverage does have two different sides, which can be very profitable, but on the other hand it can be very detrimental.

Overleveraging itself is trading using a position size that is too large compared to the available margin. Whether we realize it or not, the risk of Overleveraging often attacks beginners who want to get rich quick from trading.

For example, because Andy wants to get $ 1000 profit in a week, while his capital is only $ 10, he uses high leverage. But instead of profit, its position was quickly struck by the Margin Call. Still interested in taking risks by overleading?

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