According to statistics, 90% of traders lose their investments. Most often this happens due to several common mistakes.
Lack of money management. The first mistake of most beginners is using most of the deposit in the first transaction. You can even succeed several times. But even experienced traders with years of profit have a series of losses. Golden rule of risk management – losses from a deal should not exceed 3 – 5% of the deposit. There are additional nuances, but these are already nuances, which are studied when mastering trading.
A small deposit. Any broker has a minimum deal size. With a small deposit (100 – 200 dollars) is very difficult to fit into risk management. Or you have to settle for a very modest profit. Most newcomers at this point do not stand and begin to increase transactions to make more money. This is where the problems begin.
Lack of training. There are much more scammers telling about how easy it is to trade than clear courses convincing you that this is a profession to master. Trading on the exchange from scratch begins with entering into transactions without a system, without understanding what is going on in the market in general, how it all works. A couple of good guesses, and then – a powerful series of failures. Entry against the trend, on the fading of the impulse, etc. Free historical stock market data and other tools should help you make the right decisions. There is no point in listening to cheaters, it is better to learn from your own experience.
Attitude as to the game. Many beginners take trading as a guessing game. It’s like gambling. If the course went up five times, it means now it will definitely go down. No, it’s not. After five short rises, it can also go up, if the circumstances have it.
Unnecessarily emotional. This is a problem not only for beginners, but also for experienced traders. The profit taken several times makes you believe in your “infallibility” and start opening deals on the principle “it seems so”. A series of losses “forces” to increase the size of a deal in order to win back. Both options lead to large financial losses.
Lack of strategy. In the practice of trading we have seen the opening of deals almost with shamanic rituals. Most often the rate is twitching – the trader twitches. Only having a clear strategy with full understanding of when and what to do will keep your head cold, even if several positions are unprofitable.
Unverified strategies. The reverse side – grabbing for any strategy, praised by the author. And it’s not even that the strategy can be a failure. A specific strategy can work for a specific currency pair, a certain time range, even for certain days. Each strategy should be tested individually, on a demo account. It is desirable to have at least 100 trades during this time. Then you should collect statistics and decide whether this strategy suits you or not.
Using other people’s signals/robots. Trading on the online exchange is tempting in terms of connecting ready-made automated solutions – no training is required, and profit is guaranteed. In addition to various fraudsters (and 90% of ready-made strategies and robots are fraud), there is such a thing as the ability to work with these tools. It is better to always use various professional tools such as Twelve Data and learn to create your own strategy.
Choosing one strategy. Someone is nicer than the Elliott Wave, someone – candlestick analysis, technical or fundamental. According to the feedback about trading on the stock exchange, it becomes clear that regardless of your favorite method, you should also look at the neighboring ones. For example, on the news. When important news are published, any analysis can fail. If your strategy does not take into account trading on the news, it is better to wait for this period at all.