As a new CFD trader, you are prone to making some common mistakes. However, to help you avoid making the common mistakes, we have listed them below so that you are aware and don’t walk down that path.
Keep reading.
The Mistake of Not Having A Plan
One of the most common mistakes that newbie CFD traders make is not having a plan. Having no plan is certainly a serious mistake. You don’t necessarily need a complicated cfd trading plan at first; however, you will need some sort of plan that gives you direction regarding what you are going to trade, at what time, and for how long, and for what specific setup.
The Mistake of Overtrading
Many people fall into the trap of overtrading, especially when they are brand new to the trading landscape. Just because you have that new thing there, you think and feel confident that you can buy this and that. With so much going on, you feel overwhelmed with opportunity, which makes you commit the serious mistake of overtrading.
You must keep in mind that overtrading can lead to account closure. If you don’t have a strategy, you don’t have an edge, which will make you indulge in all that gambling, which will also make you an emotional trader who overtrades.
The Mistake of Not Using Stops
As a newbie trader, you must avoid the mistake of not using stops or not having some sort of risk management strategy in place, such as hedging. Stop-loss takes you out of the position if the trade is moving against you. In the absence of stops, you can actually end up as a massive loser for a long period of time, which can wipe out your account.
So, make sure to have some sort of exit strategy if things don’t go the way you originally planned.
The Mistake of FOMO
FOMO is the fear of missing out, and many newbie traders have this immense fear of missing out. Very often, newbie traders feel excited about buying something, and they kind of get caught in something else, especially if trading is not their full-time career. They get caught up in other things in life, and by the time they are back to trading, they have missed the sweet spot.
The Mistake of Having Tight Stops
Another common mistake that newbie traders must avoid is having stops that are actually too tight. Most newbie traders try to mitigate risk by having stops that are too tight. They are afraid to risk too much. This mistake can cause you to take out a good trade, caused by normal market noise. However, if you place the stops too wide, you will be leaving too much room. So, you need to understand the art of balancing the stops so that you can become the ultimate master at trading.
Final Thoughts
As a CFT trader who is new to the world of trading, you might fall into the trap of becoming too greedy. Trading markets very rarely go up in a straight line, which is why you must do your research and familiarize yourself with the trade first before you dive all in.
