Common pitfalls for beginners traders

7 common pitfalls for beginners traders

Operate in the foreign exchange market is hard enough without the potential traps in which fall many beginner traders. Without the proper guidance, large amounts of money can be lost quickly through erroneous practices that could have been avoided. STP as Trade brokers not benefiting from the loss of customers, and in fact, it is of greatest interest that traders obtain gains and to continue to operate with them in the long run. For this reason, they offer the following tips for operators with little experience.

No one is immune to these traps, but learn to identify them can save lot of time and money in the future. These are common misconceptions that have people about financial markets and which unfortunately are applied more or less constantly, especially for beginners.

Try to check these errors at least once a month, and be sure to protect yourself against these. Here are the 7 most common traps in which a trader may fall during his career in the markets:

Moved and concentrate too much on earnings

Veteran operators always keep calm, regardless of whether they win or lose. Make lots of money of course, is the dream of all, but the people who let their emotions peel off too when they win will not enjoy his victory for long. To think that it is a kind of glow, a trader could run a greater risk of which is willing to accept normally. It is always good to celebrate modestly when you win, but should not be allowed that this feeling stays in your head for a long time, since no one wins all the time.

Blindly follow the masses in the market

Even when there is a great calm in the market or a specific asset that can have a greater boom due to a Newsflash, it is important to be careful not to be dragged by the current, since it is often impossible to know when it will end. Novice investors often make the mistake of not having an exit strategy for the moment and can continue in the market long after the good times have ended, even losing money in large quantities.

Follow blindly the opinions and expert analysis

Investors may not know it all, even on a specific asset, so it is important to be selective and to diversify. Renowned sites and opinions of first-line operators weigh much into a decision. However, for each operation, you should consult more than one source in order to refine the plan to follow. Often, the predictions of many elite operators will be far from the reality, therefore not should get all the eggs in a single basket.

Delay time for the closing of a position

When a trader opens a position and the market moves in your favor, he tends to keep the operation open for longer than originally intended. This can occur even if an asset achieves a more high/low value than expected. After all, who knows when will reach its maximum benefit? But therein lies great danger: think that the asset goes up or down all the time. Even worse, it is common that assets carried out a considerable correction after a rise and steep fall. Inexperienced traders tend to keep their positions for too long, holding heavy losses thinking that eventually the market will start to move in your favor. The market leaders often focus on securing their gains able term when they occur, and not concentrate on large profits that can or does not occur.

Add to losing positions

This trap is related to the previous, but has a different twist. While a position that stays open may be generating losses, a common mistake that many traders make is to think that at any time the market to reverse his direction, and these losses will end up turning it into profits, which often does not occur, especially in a trend. And most importantly: do not be should add more positions in order to offset the losses, since it can take a long time until the price return to the predicted direction, and even the price could not never returning to the value at which the position was opened.

Operate based on pulse

While there is some room for intuition in Forex, operators should not base their decisions on these impulses. Instead, always must be attached to the basic principles and analysis. And certainly they should not be based on an unfounded rumor or a respected guru telling the future. Nobody is capable of this, and the failure to perceive this truth is the loss for many traders.

Going against the market

There will be times in which many people are going to lose, especially when there is a war or a company goes bankrupt. However, unless the causal factor is known clearly in your mind, do not operate against the market. Every day, millions of investors operate around the world, all with the same goal of making money such as you. Don't think that you can beat them all unless it has a clear, tacit test that are doing something wrong. Remember: sometimes there is a lot of wisdom in the crowd.

There are many other hazards to consider, but these are the main. Please note that the trading requires patience and persistence. Even experienced operators make mistakes and lose much. The more a person operates most experience win.