While starting your entrepreneurial career as a trader can make you feel powerful, it’s intimidating at the same time. Honestly, you can’t expect a bed filled with roses to welcome you upon stepping foot in the trading industry. I had a friend who bought Charter Communications stock simply because he liked using Charter Spectrum internet. I had another friend who invested, rather unwisely, in bitcoin and lost a lot of money.
Multiple challenges await you as soon as you start, and beginners are expected to fall into the loop. As an outcome, you’ll keep making mistakes, but the key to identifying your pitfalls is self-awareness, smartness and consistency.
However, you’ll lead yourself to become overwhelmed if you attempt to fix everything at once. Ultimately, it’ll only slow down your development process if you don’t realize the significance of baby steps.
Have you ever looked up to professional oil traders in Singapore and how they work to maintain their integrity despite the downfalls? Well, let’s walk you through all the possible mistakes you’ll make and how to fix them.
Mistake # 1- No Trading Plan
One of beginner traders’ biggest mishaps is the need for a versatile business plan. Only a handful of traders could emerge with a success-driven trading plan, ultimately conquering the industry.
Although your plan doesn’t have to be super-detailing, a few meaningful pages are sufficient. But the more details, the merrier it’ll be.
You must think of risk-management parameters, outline for the decision-making, and preferred trade setups.
Mistake # 2- Poor Risk Management
When running any business, taking a calculated risk becomes a necessity in such situations. And that’s where the majority of beginners fall. They risk too much per trade out of immaturity without predicting the consequences.
Remember that one must trade within the budget, or their decision-making will be impaired severely. Also, the risk-per-trade ratio must be jam-packed to avoid any hurdles. For instance, risking over 0.5% on one trade and jumping directly to 3% for the next trade will create inconsistency.
Mistake # 3- Undercapitalized Business
As a trader, it’s important to understand your finances and risk only what you can afford to lose. Knowing the loopholes isn’t only suggested for money management but also reduces the stress caused due to uncertainty of results.
Trading is already challenging, even if you don’t add the toppings of stress and complications. Therefore, always maintain your financial resources to achieve immediate success, which is uncertain.
Mistake # 4- Choose Over-trading
Inexperienced traders fall victim to over-trading all the time. They tend to overtrade, which implies that they trade too frequently and need a proven strategy. Ultimately, it leads to emotional decision-making and lifetime losses.
To avoid it, you must create a trading plan backed up by your goals, risk tolerance, and business strategy. Stick to your business plan and ignore impulsive trades based on sentimental values.
Mistake # 5- Lack of Patience
The next stop is about being impatient and expecting quick profitability. This mindset often leads to risky trades and makes you miss lucrative opportunities.
Instead, you must focus on developing a solid foundation for your business and be patient with the outcomes. Trading is similar to chess, but it’s more forgiving.so, stay back and wait till the horses work in your favor.
Mistake # 6- Neglects to Stop Loss Orders
A stop-loss order is a decree selling security upon reaching a specific price. Some amateur traders often neglect to utilize stop-loss orders, leaving them vulnerable to major losses.
Therefore, you must prefer using stop-loss orders to restrict the losses and safeguard the capital. If in doubt, you can consult professionals and eliminate the misery.
Mistake # 7- Avoid Market Trends
New traders must pay more attention to the latest market trends and news, leading to poor trading decisions.
Remember that the idea of trying your luck doesn’t apply here when you’ve proven insights and past testimonials regarding the strategies.
That’s why you must stay updated and follow the current market trends. Follow the experts’ footsteps and only go with the resources they find authentic.
New traders step into the trading world, hoping to “score big” and return home with a quick fortune. Then hits reality, leading to unexpected losses followed by lower self-esteem and waves of poor decision-making. After a few downfalls, they learn to swim with the other shark traders in the industry. Eventually, they agree that trading is a life-long pursuit in which the practitioner lets the numbers decide, not emotions.