Trading Educators Blog
Beginning Traders Main Mistakes
There are several major mistakes that traders, especially beginning traders, are making much of the time. Here is a (for sure not complete) list.
Mistake #1: Because of hype they hear from many sources, beginning traders believe they can learn trading in a couple of days or weeks. The truth is, becoming successful in the trading business takes much longer and is harder to achieve than it seems in the beginning.
Mistake #2: Lack of knowledge concerning Money Management. Beginning traders are focused mainly on the money they can make, and don't think much about the money they can lose. The truth is, most traders lose money in the beginning, rather then making any profit. Beginning traders need to spend some time and effort to really understand money management, one of the key skills of trading successfully.
Mistake #3: Most beginning traders want to learn short term intraday trading immediately, instead of starting with long term trading. Beginning traders should start looking into long term trading first, and then work their way up to short term trading, not vice versa.
Mistake #4: Many beginning traders start their trading career being under-capitalized. Because of the small size of their trading account, they have to trade with high risk from the very first moment, and they trade the account down in big steps. A much better way is to start learning the basics first, and test what you have learned with a paper trading account. Feeling confident about the trades is a key point in trading.
Mistake #5: Lack of self-discipline. "Make a plan and then follow the plan" sounds very easy. But whenever money is in the game it gets much harder than most beginning traders can imagine. Especially after a losing streak, it is very hard to keep the discipline and to follow the plan.