Even top professional traders make mistakes and lose trades sometimes. It is part of trading. The big difference between sucessful traders and bad traders is that the pros rarely make unnecessary mistakes because they have a plan, skills, a method and a strategy that they follow thoroughly. In this article we will give you tips that will help you avoid unnecessary trading mistakes.
Money Management
Before you start trading, you should have a very good idea of how much you can allow yourself to invest in your current financial situation. We believe that putting a conversative part of your net worth into trading will not only insure that your overall wealth stays protected but also that you won’t be trading with stress. There are already a lot of emotions involved during trading and you shouldn’t get into it because you need money to pay for the rent. A trader should get in the market with a clear and relax mind in order to be able to make the best decisions. That’s why you always hear to only risk what you can afford to lose.
Make A Plan
Here at EZ Trading, we talk about this a lot because we believe that it is really important. Having a trading plan will greatly impact your trading success and is necessary for everyone. Write in your plan when you’ll get in and out of the market, how much budget will you allocate to your investment or how much will you put to each trade. These are crucial aspects of your game as they give you a sense of direction. The key here is to have the discipline to stick to the plan you’ve made no matter what unless it has proven to be a bad plan over a certain period of time.
Market Analysis
Self Analysis
Knowing if you’re in the right mindset before any trading sessions is also really important. Trading requires you to be in your best state mentally, psychologically and emotionally. You will be challenged in all those aspects many ways during your trading experience and having weaknesses in any of these areas will definitely lead you to make unnecessary mistakes. So check yourself before you go. Always ask yourself: Am I in an optimal state to trade right now? If the answer is no, don’t trade and see if it’s better tomorrow. Doing this will insure that you don’t become overly emotional during trading and start forgetting about the plan you’ve made.
Keep Learning
In any fields, the individuals at the top are the ones are able to constantly learn new things about what they’re doing. This principle also applies to trading. The more you understand the market you’re in, the better your decisions wil be. A great trader doesn’t think that he knows it all and is the king of Wall Street. He understands his limitations and is seeking to gain knowledge at all costs to improve his performance. Don’t get us wrong, you need to be confident while trading but not overly confident that you believe you know it all as this will definitely lead you to make unnecessary mistakes.