Trade Like a Pro
We all want to make quick, relatively easy money on the stock market. However, it is increasingly easy to throw your money into the stock exchange and come out on the losing side. Failure is a very real reality; one that has been experienced by a good number of people. Even so, it doesn’t deter many from trying. The truth of the matter is that you have to either have experience, be unrealistically lucky, or be very smart in order to constantly earn a healthy payday from trading.
It is easy to look at the stock market as a way to earn money fast, rather than the beast it actually is. It is much easier to lose money here than to gain it. If you want to trade like a seasoned veteran, it is vital to avoid making rookie mistakes. Rookie mistakes are generally what cause young eager traders to lose money. So, you should keep in mind each of the following mistakes not to make in order to instantly trade like you have decades of Forex trading experience.
Do Not Average Down
In Forex trading, “averaging down” is basically buying more shares at a lower price in an organization you had previously bought shares in. The average price of your shares, as a result, comes down. Averaging down is disadvantageous in that money and time that could be better spent elsewhere are otherwise wasted.
Avoid Pre-positioning Before News
Even when traders know the incidents in the news that will stir the market, it is impossible to know exactly how the market will be affected by the news. You can’t possibly tell when a trend will emerge—if a trend will emerge. Pre-positioning before a news statement is consequently a bad idea.
Avoid Trading Immediately After News
News will move the market whether it is good or bad. If the news is still fresh, it will be unpredictable. Making a move immediately after the news hits without employing a strategy can be disastrous. Thus, there will be no difference between trading directly before or after the news came out.
Do Not Trade Higher Than 1% Capital)
Risking too much capital on a single trade can have dreadful long term results. The professional traders risk a lot less than 1 percent on a single trade. A good approach would be to set a maximum daily risk for yourself (not more than 1 percent of average daily profits over a 30-day period).
Do Not Expect Too Much
The market will not do as you will. You will do as the market wills. You need to come up with a solid trading plan in place so as to avoid unrealistic expectations. When implementing and testing a trading approach, you should do so with as little capital as possible at first.
Do Not Trade Shorter Time Frames
Trading at higher time frames gives you more time to filter through price movement more correctly and gives you an idea on what a price will do. Trading at higher time frames is thus a good trading strategy.
Do Not Be Impatient
Many beginners go into the market with their own attitudes—most do it because they need to make money fast and see it as a lottery. That kind of attitude is bound to destroy any trader that has it. You have to be prepared to accept whatever outcome, be it good or bad. That means if you are to make profits, you should have a sound strategy and be patient about how you use it.
Do Not Use Indicators
This is a mistake made by rookies on a regular basis. Using indicators makes you rely fully on them and as a result, you don’t learn to read the price action. Indicators actually use readings from the price action. You will not learn anything from indicators and will therefore not become a good trader, which should be your end-goal.