Trading is one of the most arduous endeavors anyone can take up. And sadly, most people kick-start without prior knowledge of the dos and don’ts in the trading industry.
For Roger Scott, bad habits tend to heighten even if you have been trading for five months or ten years. As an NFT expert and head trader at WealthPress, he says that though there are several ways to lose cash in the marketplace, every new or experienced trader tends to make some trading mistakes over and over again.
Furthermore, Roger Scott explains how traders misunderstand negotiation differences.
Do you want to give yourself a competitive advantage by avoiding popular trading mistakes? Here are Roger Scott’s overview of the top mistakes traders make.
Mistake #1: Trading without a trading plan
As a rule, don’t trade without a clear trading plan. What do you want to achieve through trading and investing in a complicated market? Do you want to make it a career? Or is it just an avenue to make extra cash?
Your goal will determine the approach and trading volume you will adopt. Depending on the plan, you will be able to ascertain if the know-how at your disposal is sufficient to start making life-changing decisions.
In addition, implement money management, risk management, and technical analysis to create a proper trading plan.
Mistake #2: Inadequate funding account
Trading can flunk due to excess capital or, more importantly, too little capital. Disaster erupts when solid volatility meets a high ego with a good deal of very little money in the account.
Twenty years ago, the average investor would invest $5,000 in the futures market. Today the same investor is still investing $5,000. Once you understand the trading market, you will accurately place the correct capital or redirect on your market trading options.
In markets where you have to trade daily, it is okay to use geared leverage. But don’t trade the total number of contracts you have.
Mistake #3: Not using a stop-loss level
How does it feel to drive a car without breaks? Dangerous, right? That’s exactly how it feels to trade without the stop-loss order.
Regardless, many traders still buy and sell without using this vital tool, and they get burnt with avoidable losses. The stop-level tool helps prevent traders from going too deep into a losing position.
In managing risks, advanced traders can use soft stop-loss levels while newbies can apply firm stop-loss levels.
Mistake #4: Misunderstanding negotiation differences
It is not advisable to copy the trading type—day, swing, or position—the newest guru promotes. You will experience a jaw-dropping ruin when you focus on one trading style rather than the trading markets.
It is more profitable to study the spreads, volatility, and rhythms of the market you are trading instead of heeding the time constraints in the market. For instance, to maximize the NFT market, swing and position trading is the go-to trading style.
Mistake #5: Trading multiple markets at once
Many naive traders leap from market to market—from NFT to forex and commodities to cryptocurrencies. This mistake can lead to losses.
Before venturing into any market, make sure you have a thorough knowledge of how it works. Do not make trading decisions based on gut feelings but upon facts. Once you have mastered a specific market, you can branch into other markets.