Mistakes Beginners Traders Make – I

By | January 5, 2015

Truth be told, when you are new at something it is very easy to make mistakes. Unfortunately, in the Stock  market you will find that almost all new traders make the same mistakes over and over again.

To have a steeper learning curve and gain more from your trades, you need to identify the common mistakes made by beginning traders and find out how to avoid those mistakes.

1. Misreading Charts

It is true that price charts are the primary tools for successful  trading . The main mistake beginners make when reading price charts lies in the identification of time frames.

Traders should always ensure that they are looking at time frames that immediately precede and immediately follow the chosen trade period.

Any other time periods are irrelevant for that particular trade period and should not form the main reason for making trade decisions.

2. Trading From Fancy Tools

Trading tools such as signals and indicators help a lot in identifying trade entry and exit points.

However, before you begin using them, one should understand the source of the signal and how an indicator was derived.

Otherwise one will always be misreading and misinterpreting them and running into unnecessary forex losses.

3. Overtrading

Very many traders go to their work stations and watch the market price actions and start getting an itch for trading.

They start feeling they may be missing great opportunities for huge profits and this leads them into entering trades just to be in the market.

Among all mistakes made by beginner traders, overtrading is by far the most common and most costly of them all.

Unfortunately once one creates the habit in the early periods as a trader, he or she may end up finding it very hard to break the habit and will carry it along even into several years of trading.

The capacity for overtrading to limit the profitability of even the best trading system cannot be gainsaid. It is one of the habits that new traders should fight to break from the very beginning.

4. Lack of Strategy

Very many new traders enter the market excited and with dreams of making it big within the shortest period of time. T

Every trader should adequately back test the trading strategy  for a reasonable period of time.

Remember to start slow by trading small amounts at first and avoiding leverage. Gradually increase your investments but only if your trades are profitable.

If you are making losses on the live account, go back and train some more on the demo account and tweak your strategy until you get it right.

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