Today it is as easy as ever for traders to take a trade in thousands of economic bazaars. But certain subjects never change, and young traders have all the chance to allow characteristic trading errors.
What are the 3 best known errors and how can they be eliminated?
Miscalculating the balance between risk and reward
Studies show that the only number of errors that profitless traders make is the lack of an accurate balance between risk and reward. Almost all allow a profitless transaction to last in the belief that the exchange will spin up and turn losses into gains. We use the opposite aspect of income. Almost all traders try to quickly consolidate income, fearing that otherwise, it will disappear.
This is, of course, completely back to the usual bazaar recommendation “let the income during and rapidly mark losses. The math here is quite elementary: if you, for example, lose a hundred pounds sterling in unsuccessful transactions and receive only fifty pounds sterling in successful transactions, in this case, your commercial result, or rather in general, will move only in 1 current – to the bottom.
First of all, rather than signing a transaction, you should think about the possible income and danger that you are inclined to go to (risk: reward ratio). According to the uniform law, it is necessary to increase twice the possible income (if not more), that you expect to acquire, according to the comparison together with the sum, which you can lose, in case the cost goes down in a sudden course.
In case the operation does not meet these conditions, in this case, it is more rational to generally refrain from it and delay, until the most successful probability arises, in which place the balance will be the most suitable. For this, of course, you need science – unfortunately, another feature that almost all traders have simply solved.
Patience is another necessary trait in trading, which, however, most of us are not enough in the first period. In the presence of continuous access to bazaars, innovations, and changing prices can make you feel that you need to function with the speed of lighting. However, how many times have you disclosed the operation, and then disappointed along with the fact that the exchange in no way instantly soared in this current, in which you waited?
The reality is that if you decide that the exchange must move in a particular current, it rarely means that someone will move in this current instantly after that, as well as you finish the operation. The exchange does not wait stubbornly, as long as you press the key “buy” or “sell” to go to their joyful approach!
Transactions need a period to form, for this reason, in case you notice in the trade excellent, according to your view, the probability, place your operation and allow the bazaar to argue your truth. Stop-losses are very important in trading, they can help to avoid trades that do not go according to your scenario, but do not set them so close to the entry point, that you will be withdrawn from the operation in the presence of the usual fluctuation of the cost.
Risking too much capital in a single trade
The 3rd most famous mistake is associated with the economic amount of the notch. The sad truth is that most people risk a very huge amount of money in 1 trader’s thought.
In case you have, for example, Thousands of pounds sterling in your account, in this case, exposing yourself to the risk of two hundred pounds sterling in such a case, that the currency will fall off, – this rashness according to the standards of many high-class traders. If defeat according to one transaction means the loss of a substantial percentage of the funds is immeasurable, in this case, there is a possibility that the result of a long time will not survive in any way.
No matter how hard this no rattle, most of the high-class traders advise to expose themselves to risk only 1-3% of the price of immeasurable in 1 trader’s thought. In other words, start firmly, even if this series contradicts the nature of many novice traders.