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  • Goro Yang
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  • Last Posted: 2017-06-14 08:41:01
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Top 5 Worst Things Beginner Traders Do

2015-03-12 07:12:18

Being a trader is one of the most lucrative profession’s there is if you know how to play your cards right. For seasoned traders, buying and selling over short periods of time means that you have to adapt quickly in the ever-changing circumstance of the fast-paced market. If you’re new to the world of finance, however, you could get carried away by the speed of trades. So here are the five worst things beginner traders do that you may learn from.

1) Having no trading strategies or having too many
One of the best characteristics of an experienced trader is that he or she knows what he or she is doing and he or she is ready for anything. This means that the experienced trader is following a trading strategy with back-up plans in case of unexpected results and he or she is sticking to it. Beginner traders have this as one of their first mistakes as they don’t yet know which strategy works for them. Moreover, beginner traders are more sensitive. For example, if a trade didn’t go as planned at first, a beginner is more likely to change strategies compared to an experienced trader that is more likely to see it through.
2) Allowing losses to pile up
On the other hand, an experienced trader knows when to give up on a trading strategy as to not let losses pile up and try out a new trading strategy. Beginner traders tend to hope that a losing trade has the chance to turn around. They are not able to adapt and realize a losing trade in order to minimize loss.
3) Following trends
There is a saying in the trading market that states that “the trend is your friend.” While this is mostly true, it should be taken with caution. Experienced traders do follow the trend however, they know when the trend has become too congested. Beginner traders have the tendency to follow blindly where the trend is. As a result, they end up overpaying and/or initiating short positions on financial instruments that have already plunged.
4) Overtrading
Trading too much is a common mistake done by beginner traders as they are still either overly zealous or overly cautious. Excitement to trade can turn nasty when significant profits become substantial losses.
5) Not researching enough
The difference between a successful trade and a failure might be as simple as an unread news report. What experienced traders know is to always be well-researched and well-prepared. They know most, if not all, possibilities of a trade movement because they did their research. Plus, they know what to look for as opposed to a beginner trader who may have done their research but looks at the wrong things. The key is to be ready.

Whether you’re a beginner or an experienced trader, it is possible for you to profit substantially so long as you be practical and ready on your trades. Have a solid trading strategy. Be adaptable. Moderate your trading. Know what you’re doing.