Every year there are more and more people who want to earn money with the help of Forex trading. But not everyone succeeds in achieving a positive result. If you believe the statistics, only 24% of traders become successful, and the rest are less lucky. Broker Aegis Corporate Financial Services has conducted a small research, which helped to understand what mistakes beginners most often make that lead their accounts to losses.
Having analyzed everything, having re-read quite a lot of information, the specialists of the company managed to highlight the following wrong steps made by inexperienced players:
Because novice traders do not fully understand the basics of fundamental, technical or volume analysis, they make rash decisions. This problem is easy to solve, for today there is quite a lot of information available, and Aegis Corporate Financial Services broker provides free training consisting of a variety of educational materials.
As for technical analysis, it is better to use cluster analysis, as it is the one that is considered more accurate and up-to-date. This is a highly accurate method of price forecasting, which is based on the detailing of traded volumes, and therefore provides more detailed information about the market.
Also specialists of Aegis Corporate Financial Services broker noticed that beginners almost never stick to certain strategies. Basically, they work without trading rules for entering/exiting a market position, and also do not apply them to limit monetary losses. It is quite difficult to achieve good results without elaborate instructions describing the actions taking into account the current events on Forex. For example, when going to work in the office, a person makes a more comfortable and convenient route in advance, selects suitable clothes, taking into account the weather outside the window, as well as the prevailing dress code. In trade everything is similar, so it is important to have a clear plan, for it will allow:
Without a strategy, beginners become nervous, make rash actions, close deals on emotions, which rarely leads to something good.
Beginning traders have an excitement. At first they perceive trading as nothing more than entertainment, and then as an opportunity to get quick money. Associations with sports and bets arise and therefore market analysis is put on the back burner. Then mass buying or selling begins, which negatively affects the account.
Newbies can also take the position of a prognosticator, diligently waiting for the right time, while missing out on profitable deals. They also start looking for facts that prove their case, without noticing the obvious. In this case, logical thinking and the desire to gain income go to the background, but the need to be recognized as right comes to the fore.
According to the experts of Aegis Corporate Financial Services broker, the personalization of success is also among the psychological mistakes. A trader begins to identify profit with his abilities, forgetting the following:
In this case, the player thinks that only their presence makes the deal successful and the rest doesn't matter.
There is another extreme. There are beginners who over-personalize losses, so after the first failures they put their hands down and start blaming themselves for everything. During losses, a novice trader goes through such stages:
As with grief, the stages can also be repeated, alternate, rapidly change each other. But, if you learn how to competently use the limitations of losses offered by Forex Aegis Corporate Financial Services negative consequences can be avoided.
Beginners are also prone to making emotional decisions. In trading, rationality, prudence, and equanimity are important, otherwise you simply cannot make money.
Some novice traders start with borrowed or last-minute funds. This also has a bad effect on their results, as greed and fear arise, leading to wrong decisions. Some of them expect increased profitability, not realizing that it is impossible to calculate everything in advance, and the trading system can help to manage losses, but not make a prediction about profits. Plus, not everyone fully understands how to use leverage, not realizing that it is not infinite and it is not a guarantee of desired earnings.
According to Forex Aegis Corporate Financial Services experts, beginners open too big positions, which is also not the right move. They also do not know how to manage their funds, they do not understand where to invest and where not to invest.
Trading is pretty uncertain, but it's still realistic to make money in the stock market. Here's how you should proceed:
Experts of Aegis Corporate Financial Services broker recommend to start working with small volumes of transactions, gradually increasing them as you gain experience. It is important to stick to the trading plan without deviating from it due to emotions or current events.