More and more people are making their living by trading commodities online and as this new and exciting sector grows, the markets get more complex, and with that in mind, success is never a given with online trading; here are some of the most common mistakes new traders make.
- Emotional attachment – This is a surefire way to heavy losses; one should never be emotionally connected to any trade; if you are a passionate sort that becomes easily emotional, perhaps trading is not for you. If you have a heart of stone, sign up with MT4 and start your quest for success. A cool head is needed and start with fictional trading to see how you would do if you traded for real; once you are ahead, start trading for real.
- Over-optimistic – Some of us are definitely half-glass full types and this can be an issue with buying and selling; you can easily convince yourself that the stock is going to rise, when there are no real signs of this. You need to be grounded to reality and be realistic with your expectations, otherwise disappointment awaits!
- Failing to crunch the data – Hit and hope won’t make it in today’s dog-eat-dog trading arena; make best use of trading software and hook up with a top-rated trading platform. You can learn so much by forging a working alliance with an online trading platform; smart traders let the algorithms do the hard work and they make data-driven decisions in real-time. Just because a popular trader is ranting about a stock or crypto, that doesn’t mean it will increase in value; there are many variables that come together and using the right analysis software is vital.
- Excessive leveraging – Leveraging is the ability to borrow to make bigger trades, which can be very tempting, yet the road is risky and you only need a couple of heavy losses to put you in the red. You might argue that if a $1k trade brings a good return, $5k makes a lot of sense and why stop there? You could end up with a big debt by going too hard on something.
- Greed – It has to be said that greed can be a trader’s downfall; if you want to be rich and you are impatient, this can lead to bad choices, then you chase your losses and before you know it, you have to shut up shop! Don’t get emotionally connected to your trading and stick to the rules you set up at the start.
- No plan trading – If you think you can wing it and end up as a super successful trader with all the perks of the millionaire lifestyle, think again! You need a trading plan that identifies trading goals –many fall by the wayside because they have no real plan, don’t let that be you! Are you looking to make some extra cash with trading or perhaps you want to make a living out of your trades? You might have a short-term plan to trade, as a stepping stone to real estate investment, which is fine; just be sure that you know why you are trading.
- No stop loss order – Using stop loss orders prevents things getting out of hand and every new trader should use stop loss orders. Successful trading is all about risk assessment and management; there are powerful trading features to protect you and not using them is nothing short of folly.
- Too many positions – There are many markets and it is easy to over commit and take too many positions, restrict yourself to a limited number of trades and don’t exceed that until you have some hands-on experience in the arena. Like anything, trading is an acquired skill’ be open minded, keen to learn and take small steps forward rather than huge leaps.
- Revenge trading – You suffer a loss and naturally, you want to correct this; if you trade once more, only this time with a higher position, you can recoup your losses. Can being the operative word. Again, this is tied up with emotions and there is no place for sentiment or feeling when trading in real time. Stepping back from a loss can be a painful experience and knowing when to call it a day on a particular trade is something that you learn over time.
We hope the above information goes some way toward preparing you for online trading and start with heavy research into various markets and be realistic in your expectations. The chances are that trading is not going to put you in the elite bracket, but it could generate wealth for a secure future.
