Top 5 Common Mistakes Traders Make That Leads to Profit Loss
According to stats, over 90% of traders fail in trading. That’s some massive loss! The same stats revealed that only about 10% of all traders make consistent profit in the market – 10% break even.
Why do many traders fail? There are a few common mistakes responsible for this. Learn them and understand how to manage them to join the few profitable traders. Keep reading.
Major Reasons Traders Lose
There are several mistakes traders make that cause them to keep losing. Below are five of them.
Exposure To Too Much Risk
For beginners, fear of missing out often takes over their emotions. This makes them risk too much while trading. It’s a sort of classic mind-cramp that often begin when newbies comes across missed opportunities.
This makes them think about how much they would’ve gained – but not also considering what they could have also lost. This is a trap.
Assuming 50% of your capital was lost in a single trade, it means you need to double your cash for the next trade – just to break even.
If you are just starting in trading, this isn’t sustainable. As a rule, always trade with what you can lose without sweating it.
Lack of Proper Market Research
Many traders that often lose have a bad habit of opening or closing positions based on gut feelings. Or simply because they got a few tips.
At times, it can bring profits. However, you still need some market research and evidence before you close or open a position. It’s crucial!
You need to have a proper understanding of the market before opening any position. You also need to know the different conditions of the market as well as whether it’s volatile or more stable.
Not Having A Trading Plan
Before any trade, know what you want to trade as well as when to trade. For such trading experience, you need a verified forex ea. To be successful with trading, you need a long-haul outlook. A good action plan is also needed. Before any trade, know what you want to trade as well as when to trade.
Neglecting these means, you will lack in a general direction. You will be switching market, strategy, and methodology. The result? Bad influence on your overall trading performance.
For success in anything, consistency is key. The same goes for trading.
Neglecting To Use A Stop Loss
The difference between losing everything, making profits, and surviving in trading is the habit of always using a stop loss. There are days and seasons when the market is very volatile.
For safety, you need to be using a stop loss to protect your capital. As a new trader, placing your stop loss in every trade will help you stay in business. Volatility can trigger at any time of the day.
Poor Management Of Emotions
Mental discipline is key to a profitable trading career. Always guard your emotions while trading. When you lose control of your emotions when trades go against you, it can cost damage to your account.
These are the best moments to exercise discipline by sticking to your trading plan. Avoid alcohol tobacco, and even gluttony, before your trading sessions.
Also, make it a habit to always get a goodnight’s rest. Meditation also helps.
Newbies to trading will perform better when they identify and manage some of the common mistakes traders make. Doing this makes any trader join the few profitable traders.
Finally, you can reach out or read about techniques and tricks used by traders like Marc André Pépin.