Few mistakes which beginner traders make while trading.

Posted by Nayna Bhardwaj on April 24th, 2018

Everyone wants to earn well by trading and many have opted trading as their profession. Only by willingness to invest in the market you can not make profit on your investments. There are various risk factors associated with making investments in market. Hence, traders prefer taking tips like commodity tips before making any investment. Also, to earn returns you need to be consistence and should have deep knowledge about market.

Trader basically buy and sell securities very frequently and hold the positions for very short period of time than investors. A new trader’s capital can be quickly swipe off by this shorter holding periods and frequent trading.

Here are some worst mistakes made by beginner traders.

1. Letting losses mount- The ability to take a small loss quickly if a trade is not working out and move on to the next trade idea is one of the defining characteristic of a successful trader. On the other hand, unsuccessful traders get paralyzed if the trade goes against them. And they may hold on to a losing position in the hope that the trade will eventually work out rather than taking quick action to cap a loss.

2. Failure to implement stop-loss orders- For successful trading stop-loss orders are very crucial. And traders who fail to implement them are making one of the worst mistakes that can be made by a novice trader. The losses that are capped before they become sizeable are referred to a tight stop losses.When a trader cancels a stop order on a losing a trade just before it can be triggered, because the trader believes that the security is getting to a point where it will reverse course imminently and enable the trade to still be successful and this is the common trading mistake.

3. Not sticking to a trading plan or not having one- Most of the experienced traders get into a trade with a well defined plan. They know the capital amount to be invested in the trade, their exact entry and exit points and the maximum losses which they are willing to take etc. Whereas, before the beginner traders commence trading they may be unlikely to have a trading plan. Even if they are having a trading plan they might be more prone to leave it than seasoned traders if the things are not going their way.

4. Trading too frequently- Overtrading can gradually destroy the returns to the point where nice profits will turn into significant losses. Experienced traders have learned the way that trading too frequently can severely harmful for the overall returns and performance. New traders are yet to learn this lesson.

Trading is very interesting and can be very profitable as long as the above mentioned mistakes can be avoided. Trading needs great knowledge about market and experience and if you lack these aspects you can face great loss. Hence, to minimize the losses and to increase the returns traders have started taking financial services from well known stock market advisory. With this they are able to invest with the some best investment ideas.