The most common mistakes of traders
Traders with no experience or ignorance can make serious mistakes in their work, which lead to significant losses. Before starting trading, it is necessary to analyze the trend and make a clear trading plan.
Errors of traders on the financial market
The most common mistakes:
Stop Loss Failure. Stop loss is necessary in order to limit losses or take profit if the trend is moving strongly in one direction or another. Failure to set it may lead to the fact that in case of a sharp movement of the chart on short time intervals the trend will "go down" and for its correction will require a much longer period of time than originally planned. Usually, a currency market trader should plan his potential loss and include it in his trading plan.
Lack of strategy. Failure to follow the original plan may lead to a trader panicking and starting to act recklessly when the market slips sharply. Usually, this happens to beginners at the very beginning of trading activity. Drawing up a clear trading plan allows the trader to control the situation and not to give in to emotions.
Leverage is too large. This parameter is provided to the trader by his broker. Too large a deposit amount psychologically gives the trader a sense of wealth. He starts to feel invulnerable and buys too big lots when making trades. This approach can lead to significant profits with proper planning, but in case of unexpected market movement, it can ruin a trader with only one deal.
Confidence in one's own abilities. Sometimes, the trader is hindered by too much confidence in their abilities. He thinks that he has already reached a certain level and starts making such decisions, which he is sure of. Forex market is quite unpredictable and subject to strong dynamics, especially during the period of important news release. Expectations may not be justified, and the trend may go in the wrong direction as expected. Failure to set a stop loss when the market moves in an unprofitable direction may result in the deposit being ruined and zeroed. Therefore, a trader must be prepared for any chart movements. Experienced traders recommend not to enter the market at all if there is a potential for large trend fluctuations.
Lack of discipline. This refers to the strategic planning plan. Having surrendered to panic, a trader starts acting not according to a pre-designed plan, but under the influence of emotions. For example, the trader has planned a loss and set a stop loss, but in the process of a deal he can see that the trend will correct after the subsidence. Then the trader can start shifting the order or delete it completely. Such an approach can lead to losses.
Excessive emotionality. This error is common if there is a lack of experience. The trader may start to panic at sharp currency fluctuations on short-term charts and will try to correct the situation. For example, overly emotional traders very often, opening a deal and seeing that the chart is moving in the opposite direction from the planned one, close it immediately without waiting for correction. This approach prevents them from taking the planned profit.
The above mistakes can be made by any market participant, especially in the absence of experience. Specialists recommend to keep cool before the chart and not to give in to panic. Also, experienced market workers advise in the absence of confidence to make deals with a small lot to earn at least a few points.
Another important and worth mentioning is the choice of a reliable brokerage company to enter the market here the availability of a license and reputation of uninterrupted work for at least several years will help.