5 Biggest Traders’ Mistakes: Prevailing in the financial markets requires a well out plan which is critical if one is to succeed. A checklist.
Why do people go in for trading? Most brokers and Wall st traders want another source of income so that they can live more luxurious lives, the others try to take their finance under control, caring for wealthy retirement. Anyway, one thing unites both – the money.
Those who stay in this business for long work out their own strategies, find new investors, try innovative tools or platforms for desktop or mobile trading. However, only a few of them are truly ready to analyze their mistakes. No matter for how long one might trade, things change with time. Technologies change as well. To stay in business, one should be able to bend with ease whenever the wind changes. Here are 5 most common mistakes the majority of traders make despite their experience.
- No plan
Experts say that those who count only on 4-leaf clovers, believing their strategy will never fail, often end up with huge losses. Before starting working with money, professionals usually make up a good plan including:
- asset allocation;
- asset classification;
- main risks;
- aims and goals.
With such a plan in front of their eyes, brokers boost their reaction to any stock movements.
Margin is an opportunity to trade more for larger profit. But in case of any fail, that is a huge financial gap between an investor and his broker. It is wise to use margin as large as traders can easily return with no harm to their personal finance. Without any doubt, margin is a good concept, but only when used properly.
Old school trading is about staying in front of a PC for a whole day, sticking to those graphs and financial news. Today with help of smartphones and various trading apps we have an opportunity to communicate with each other anywhere.
It is a common thing for good traders to make up local groups or communities, where they meet up and share their latest discoveries or discuss latest tools. No one is taking a PC with them any more. A good reliable smartphone is more than enough.
4. Cheap stocks
This mistake is common for newcomers, but professionals sometimes act the same way when willing to have a so-called ’lazy day’. They believe that a fallen share price represents a good buy, but in truth the price for such stock is mostly rolling down faster than they manage to take another move.
The worst thing that can happen is traders ignoring volatility. It is the main feature that shows off in cases when any premium stock is expensive or cheap. What was expensive in the morning can be worth nothing by the end of that day. When coming across something cheap, one should definitely take a look at debit strategies.
To sum up, trading on Forex can be a very profitable thing. However, if you are new to this, it is advisable to start from small amounts of money. When all risks are taking into account, all you need is to download an app and start making money!