Trading is not a tough business. You earn your first $100 by selling newspapers at the central square, deposit them on your Forex account and use your skills to expand their value, gaining higher return on investments. However, only a tiny part of traders succeeds while another part gives up after the first failure. Mistakes they make are typical and smarter ones who want to have successful start in trading should recognize and avoid them.
5 mistakes smart traders never make
Preoccupation on technical staff
Those who start, spend a lot of time on learning statistical tools and platform differences instead of learning basic staff and starting a trade. To tell the truth, it is not that important whether a person trades with MT4 brokers or MT5, successful traders make high payouts no matter of the system they employ. Using advanced statistical tools will not make the trader better off than a person who uses a simple trend line or moving average.
Trading with large amounts first
Nobody is perfect at the start of a trading part. Success always follows failures, which are not obstacles but teachers who give you experience and important lessons. If you start with large amounts of trade, you will lose a lot and not have anything to continue but if you start with smaller amounts, your mistake will not cost you a lot.
No reading and self-development
Investing in foreign exchange and stock markets has a large history. A person can gain valuable insights by reading books of experienced investors like Warren Buffet or Jack Schwager. If you don’t value their past experiences, you might make the same mistakes as they’ve made while reading can help avoiding them. Further reading will teach you how to use more advanced instruments or how to achieve higher payout with existing ones.
Reliance on a short-term variation rather than long-term trends
When company’s stock plunges, it is not the signal to sell it. Of course, if there is a market turn-down or the company suffered a trait, it may be the reason to sell a stock, but successful traders seldom rely on short-term fluctuations. They believe long-term tendency much more than short-term shocks.
Diversification always reduces risks. Holding one risky asset, you are more likely to lose your money, than if you hold 5 or ten of them (if the price of a single asset plunges, rise in prices of others will cover up the resulting losses). Beginners always invest in one or two risky assets and rely on their luck while more experienced investors always hold more assets making their portfolio safer.
Even if you avoid all these 5 mistakes, you may fail if you choose the wrong broker. Look carefully whether the broker is legally registered and which platform it incorporates so your deposit will be safe.