Are you having a tough time trading and staying afloat? Don’t feel alone because nearly 96% of traders fail and leave disgusted or broke after making the same bad strategy decisions over and over. Here are five possible reasons why things went wrong.
You are letting your emotions control your trades. Fear and Greed are the top two emotions that cause traders to fail. Fear of losing can cause delays in buying and selling at the right moments and usually ends up in losses. You would think greed would be a good thing in trading but it should be avoided. Greed can cause impulse trading that can destroy you in a bad way. There is always hope but hope can often be the glue that holds fear and greed together. It can cause a trader to try and make up for the losses they have been having. They may enter a trade above their normal range. But if fear takes over the trade can end badly and this leads up to frustration. Frustration is the feeling you end up with after letting any one of these emotions control your trades. Bottom line: don’t trade on emotions.
2. Not Buying The Bottoms
Not buying the bottoms. This can be linked back to the emotion of fear. The trader may be afraid to buy the bottom thinking the bottom has not arrived. This can cause a delay in purchasing when the price starts to go up causing fewer profits or sometimes none at all.
3. Ditching Strategy
Abandoning your strategy. Say you have done the time researching, watching, and learning and you have a good strategy going. You are making good trades and making money. Then you make a half a dozen losing trades. You change your strategy but you keep losing. You adjust your strategy many times only to end up close to the original strategy you started with.
4. Lack Of Knowledge
It is easy to gain access to the financial market and trade. It is also important not to underestimate the importance of knowing what you are getting into. Having no knowledge guiding your trades will not bode well. Having harmful trading habits like being impatient and making spontaneous trades shows you do not have a solid strategy to stick to. Just having basic knowledge can help you avoid scammers and others giving out tips and trading signals.
5. Poor Management
Poor risk and capital management. Properly managing your capital and risk levels can help you control how you respond to the market’s ups and downs. Say you decide to invest 5% of your balance on a trade and use up to 15% of your balance overall during your trading session. This will limit your exposure to large losses. Even if some of your trades lose, you don’t wipe out all of your capital in a single session.
Markets provide great trading opportunities that can become very lucrative if you avoid these and other common mistakes. Take the time to educate yourself, pick a strategy, and stay calm so you can let the market do what it does.