Greetings, dear subscribers and guests of the Tevola.ru website!!!
Major players certainly know about our weaknesses, and they make money from this. Do you think they don’t have mistakes?, of course they do, but only they work in teams and control each other, and we have to deal with our weaknesses alone.
But we can absolutely say that we will be able to remake ourselves, not make typical mistakes and move to a new trading level, the main thing is to know what to fight, and this is what will be written here.
There are a lot of articles on the Internet on this topic, and they are written like a carbon copy about the same thing. After reading articles from other sites, comparing the mistakes described in my journal, the thought came to my mind: “Why the hell at the very beginning of my journey, I was not looking for traders’ mistakes, but trying to find a strategy and make money?”
This is greed and stupidity, guys. So, I pass on my experience to you: “Start mastering the path of a trader not with your big shots, you already have enough of them, but learn from the mistakes of beginners and experienced traders.”
Lack of basic knowledge
Most novice traders are eager to quickly start their journey on the stock exchange. But trading without the basic fundamentals of technical and fundamental analysis is very risky. In this case, trading turns into a game of chance, where the trader can be lucky for some time, but then someday it will end.
If you don’t like to read, you can watch training videos on YouTube. They are free. Of course, it is advisable to read the literature. You will see that there are many approaches that sometimes contradict each other. Some people advise buying only following the trend, others only trade counter-trend movements. You can make money using different strategies.
For example, you can make money from stock growth not only because the quote has gone up, but because the company is a working business. Many people forget about this. Therefore, you can short shares only in the short term and with a clear understanding of your further actions.
- Forex technical analysis figures;
- Candlestick models and patterns with examples;
- Trading strategies for the exchange;
- Technical or fundamental analysis;
- Stocks and Bonds for Beginners;
- Growth Stocks vs Value Stocks;
Lack of experience
This is not so much a mistake as a fact that beginners do not want to come to terms with. Of course, someone who has spent long hours, weeks and months in front of the trading platform has a much better chance of understanding the current situation on the chart than someone who has just opened the terminal.
Your task is to accept this fact and not pretend to be a smart guy. Yes, this is exactly what happens: traders do not want to study, listen to analysts, and even more so - read books and watch economic news. For them, as they themselves believe, a couple of videos from the Internet and advice on social networks from experienced people is enough. However, this is far from true: even if you understand the theory, read a lot of books and watched dozens of webinars, this is far from a guarantee that in the real currency or stock market you will have the courage to put aside emotions and find on the chart all the patterns that you know . Moreover, take into account fundamental factors, get the right signals from indicators, and before that, set them up correctly, somehow eliminating purely technical errors in stock trading.
Even trained traders fall into a stupor, let alone those who did not even prepare to meet the market!
So there's no point in playing heroes. In general, playing with the market is not a good idea. You can check this on your own deposit, or take our word for it. The second is certainly cheaper, but the first is much more convincing. The choice is yours.
Fast profit taking
Beginner traders like to take profits. They think it's easy money. How can they not be recorded? What if the quote reverses?
As history shows, it is better to hold profitable positions for a long time while there is an upward trend. Traders sometimes, having entered into a trade well, quickly get rid of it. After which the quotes only accelerate their growth, since this was only the first impulse of the beginning of the trend.
We tend to take early profits purely psychologically. We want to receive a guaranteed income, even a small one. The situation with losses is different. We categorically do not tolerate them and are ready to hold unprofitable positions for a long time, just not to lose.
- Psychology of trading in trading;
- How to understand that it is worth selling assets;
4. Trading without a strategy, acting despite the development of the situation
You should not even try to trade without a carefully prepared and tested strategy. You need to enter the real market only after the final adoption of the trading strategy previously tested on the demo version. For each day, a detailed trading plan must be drawn up with a clear indication of all the circumstances of opening a transaction (currency pair, direction of price movement, stop-loss and take-profit levels, etc.). Unless force majeure circumstances arise, you must strictly adhere to the plan. You can use pending orders by specifying their duration.
Averaging losing positions
This mistake is most destructive not in the stock market, but in currencies, cryptocurrencies, and commodities. Averaging losing positions only worsens the trader's position. It is much easier to re-enter the market into a growing asset than to become a long-term investor in a speculative instrument.
Extreme situations can occur in markets. For example, in April 2022, delivery futures for May WTI oil fell to -$40. Everyone who held this position suffered huge losses, as the Moscow Exchange forcibly closed all contracts at a price of -$37. Of course, this is an exception, but such a situation is enough to lose your entire deposit.
If we are talking about the strategy of averaging across a portfolio of shares, then if you are 100% confident in their reliability and stability, then you can hold them. It is better to close all other financial instruments using a stop loss.
By the way, there is a very profitable strategy of averaging positions as the asset grows. This strategy is called pyramiding. If you manage to catch a good trend of at least 5-20% growth, then you can earn huge profits through the use of leverage and consistent entry on drawdowns along this movement.
Not following a trading plan
If you want to be consistently profitable, you need to stick to a consistent set of actions. This is why you need a trading plan.
A trading plan is critical to your success because it gives you clear rules on how to behave in the market. Entry and exit points, position size, risk level - your trading plan should take all this into account.
However, there may be situations when you deviate from your trading plan and enter trades due to the current market situation or your mood.
For example, I am a supporter of trend trading and I like to enter the market only during trend movements.
However, if the market is in consolidation and I see that the price is near a resistance level and the stochastic is indicating oversold, I may be tempted to enter a trade.
Why is this approach dangerous?
- Your trading becomes erratic and you become distracted from finding only profitable setups for your strategy.
- This can lead to overtrading, causing you to become emotional and stop analyzing the market objectively.
Therefore, you should never find any excuse for entering the market contrary to your trading plan. This will do you more harm than good. Focus on just one approach and don't get distracted by anything else.
Trading one share and the desire to win back on it
If a trader has lost money on a particular stock, then you should not focus all your attention on it. Many people try to re-login only to it, but this is a gross mistake. Why trade only one stock if there are no significant signals? This is only possible if you are angry at one particular action.
In trading, emotions are destructive. While you only follow one stock, you may miss other good opportunities. Therefore, there should be no favorite shares and a thirst for revenge.
A successful trader makes money where he sees opportunities and never deliberately returns to a financial asset in order to win back losses, to increase his “ego”, which he was able to do. There is no point in proving something to the market.
Ignoring spread changes and the impact of spread on profit
When you are planning to open a position, you need to remember that the deal will not open at the price you see on the platform. There is a commission determined by the market and the broker: this is the difference between the Bid and Ask prices. Thus, your position will open a little “worse” than the market: lower or higher than the current price - just by the size of the spread.
Let's imagine a situation: you are going to trade on news, and your broker usually widens the spread at this time. Instead of quickly entering the market and catching a price jump, you will find yourself stuck in a loss that you have yet to get out of. That is why, every time before opening a position, you need to pay attention to what the current spread size is for the selected asset.
You can calculate all other parameters of the transaction using online trading calculators.
Going on tilt
Tilt is a condition in which a trader makes rash trading decisions after a string of losses. His actions are largely based on emotions.
The advice here is the simplest: if trading is not going on, then it is better to take a break. This is difficult, because it seems that after 5 losses in a row, the next trade will definitely be profitable. But as practice shows, it is best to close the trading terminal and not trade at least on this day.
A series of losses in trading will happen periodically and regularly. It is impossible to always just make money and fully predict movements on the stock exchange.
Greed (thoughts about the “big score”, and not about sane money management)
If you want a lot of money, this is a great wish! But the market is not as predictable as you think, and this is where the main problem lies. There is nothing wrong with wanting profit and earnings. However, one must understand that neither their size nor the very fact of their presence is guaranteed by anything or anyone. You can only count on the fact that the fate of your money is in your hands. How exactly you use them, what you invest in and what trades you open depends only on you. It's a nice power: feel like a smart manager, not a player. After all, these are completely different statuses, don’t you agree?
Of course, we have not listed all the mistakes a trader makes in stock trading, but if you work through at least these few points, your personal trading world will definitely become better!
Rating: 3.4
No stop losses
Most novice traders do not set stop losses; this can almost be called a pattern. On the one hand, this is acceptable, since we are buying shares, but on the other hand, it makes sense to be a long-term investor when we can re-enter at any time.
If we remember about Warren Buffett, his path consisted exclusively in long-term investments and he was able to become the richest man in the world (now he has already been ousted). If he had the opportunity to quickly sell and buy shares in the company, then maybe he would earn more.
Small traders have the advantage that there is no constraint in movements and they can quickly sell/buy shares. Therefore, there is no point in holding unprofitable positions. It's better to re-login.
- How to look for the best stop loss levels;
Trader technical errors
Technical mistakes of a trader are one of the important components of profitable trading. It's easy to fight them. Write down your mistakes in your diary and, before opening or closing a trade, see if your actions contradict your own rules.
Mistake #1. Trading at random is the path to loss.
At best, a beginner will learn some strategy. Just some kind, since he doesn’t understand anything about the market, who is selling, who is buying, what’s going on, why yesterday the movement was 100 points, and today it didn’t even reach 20 points, but there is a strategy posted on the Internet, and let everything be around They say: “It’s unlikely that working strategies are distributed for free,” but he is a genius, he found exactly what will bring money.
In the worst case, a novice trader will rely on his internal “premonition” (which does not exist and, due to lack of experience, cannot exist).
A beginner will want to immediately enter the market, because it seems to him that this is the best price for opening a transaction, and even more so, there is a stop value, so there is nothing to be afraid of. But, Alas, a mistake, the first loss, the deal is closed exactly at the stop and from this point it turns in the right direction.
What's going on in a newbie's head? He begins to think about the 4th main mistake traders make .
Mistake #2. Beginners do not comply with money management.
When does a trader begin to violate money management?
Option 1 . The trader strives to cover the stop for the previous losing trade, and this is nothing more than an attempt to win back, which means you have taken a step back and go to step 4.
Option 2 . The trader simply does not know about its existence. In this case, you will have to study the opinions of different experts and use the system you like best for calculating lot sizes. Usually this is 3-5% of the deposit.
Option 3 . Starting to make profitable trades, the trader begins to think about the lot size, and whether to increase it (read the article about Leverage)? This cannot be done. By increasing the lot number, the chance of losing your deposit will increase.
Mistake #3. Trading against the trend.
I would like to note that this point is considered a mistake for novice traders, as they have little experience and lack confidence in their actions. Of course, many experienced traders are against trading against the trend, but at least it doesn’t stop me from holding a position with the trend and entering a small rollback. The main thing is to know where and where.
I do not advise beginners to trade against the trend; a mistake can be costly.
Mistake #4. Trading without stops.
The stupidest thing to do is trade without StopLoss. Both experienced traders and beginners make mistakes - this is normal. We can't control the market, the only thing we can do is not let the market take too much.
Before entering a trade, you should think not about profit, but about loss. Accept stop?, open a deal, no!, then we wait further. And if you get a stop, then there’s no problem here either, you won’t be too upset when buying a bus or metro pass. These are expenses that will help you earn more. You need to think the same about your feet.
Mistake #5. Catching knives.
Don't run after the market. The most common scams of large players are due to sudden movements. This usually happens on serious news (non-farm, etc.), when the price jumps in one direction, everyone comes after them with the thoughts: “Now I’m about to catch the movement!”, the market takes and turns around, and your position is opened at the very peak, but in the wrong direction.
Hence the rule, do not trade sudden movements, especially news. Gain experience and patience, wait for your entry. As one cartoon said: “Calmness and tranquility.”
Mistake #6. Averaging.
The biggest mistake a trader makes after catching a knife is to average.
Forget this concept and never even think about it. You can only add to a trade if it is already in the black, otherwise you are in danger of disaster. It will work once, the second time it won’t be bad, but the third time you’ll lose your deposit.
Mistake #7. Beginners do not keep a Trader's Diary.
And in conclusion, the most important mistake of any trader (beginner or experienced) is the lack of a Trader’s Diary.
Completely new to trading. He tries to constantly act, loses somewhere, earns somewhere, but ask him: “On what basis did he enter a week ago?” and he won't answer you. Ever since school, every person was taught: “Do your homework”; those who understand this will find it easier, but those who do not understand will constantly mark time.
Analyzing completed transactions is an important part of the work and must be done thoughtfully. To do this, the trader needs a trader's diary (magazine), which records EVERYTHING about the open transaction.
Big risks
Brokers provide the opportunity to take on large leverage. Gambling traders take advantage of this. They may be lucky for some time and the market will forgive excessive risks. But someday a “black swan” will arrive and the deposit will be completely destroyed.
Therefore, one of the important rules to stay in trading for a long time: a reasonable amount of leverage or its absence.
In Forex, leverage reaches 1 to 500. This is simply killer for capital. Stock brokers limit it to 1 in 50.
- Money Management - what is it;
- Margin trading;
