Trading Psychology and Mistakes Beginner Traders make

 

Trading Psychology and Mistakes Beginner Traders make

Mistakes Beginner Traders make

The first mistake, is revenge trading. This is where a trader places a random trade after a loss, to cover it. At most times, a random trade leads to another loss and the cycle continues. This can easily blow up your account.

The second mistake, is forgetting to practise risk management. Risk management preserves your account. A single lot(position) size mistake can blow up your entire account.

The third mistake, is using random trading strategies from social media platforms without backtesting them.

The fourth mistake, is changing strategies every time you lose a trade. No strategy has a 100% win rate. Sometimes as a trader, you can have a losing streak even with a good strategy.

The fifth mistake, is removing your stop loss order so that you cannot get stopped out. This can also blow up your account.

The sixth mistake, is chasing the market. For example, randomly buying whenever you see a bullish candle being formed.

The seventh mistake, is trying to use a very large risk to reward ratio. Your winning rate will be very low if you use a large risk to reward ratio like 1:3. It’s better avoiding it.

The eighth mistake, is believing scams on social media platforms like, “Converting a hundred dollars to one million dollars in a year.” This is unrealistic, and it will give you unrealistic expectations.

 

Trading Psychology

Trading Psychology relates very well to the mistakes that beginner traders make.

Trading psychology refers to the emotions that dictate the success or failure in trading.

Trading psychology becomes very significant when you are trading in your Live Account, because there are no serious emotions and mistakes in a Demo Account.

Discipline is the most critical aspect of trading psychology.

Fear, greed and unrealistic hope are emotions that can go against you in trading.

You should be aware of these emotions which can cause trading mistakes like revenge trading, moving or failing to set your stop loss and FOMO.

FOMO is an abbreviation for the Fear Of Missing Out. FOMO is where you are anxious that you might miss out placing a trade that will make you a lot of money. Which is an illusion most of the time.