9 Trading Mistakes You Need to Avoid to Stay in The Game

The benefits of social trading are many, the two most important being (in my opinion): 1) the fact that you can learn from the experience of others and contribute your own ideas and insights and 2) the possibility to copy successful traders. The second benefit is especially valuable, since it helps us sleep at night even with such unpredictable markets out there, because we trust our trading heroes know what they are doing.

Still, isn’t it better to perfect the trading ourselves? To have hordes of beginning traders copy us some day? With that goal in mind, many rookie traders enter the tough world of financial investing and trading, hoping to really learn the craft, not just make some quick, easy cash.

However, it’s barely possibly to learn anything without making mistakes. So, here’s what I found to be the 10 most common beginner traders’ mistakes that you can learn from and try not to repeat (more than once):

1) Don’t be cocky

Most beginning traders stumble on this obstacle: surge of confidence. When some luck smiles upon a beginning trader and he or she make a series of winning trades, they start believing all future trades will be wins. If we don’t count those lucky winners of sweepstakes, hardly any big money making comes without hard work. Far more experienced traders know not to be cocky about their skills and successes.

2) Don’t trust your sixth sense

Though it’s very romantic to believe in intuition, it’s wiser to rely on logic, information shared by others on that you follow on TradeCrowd and good strategy when dealing with any kind of financial transactions. Beginning traders often believe that they are born for this and will soon be recognized as super traders – they just need to follow their heart, and not so much their mind. Wrong!

3) Have a plan

Trading is not a game of “who’s the best at improvising”. Without a clear plan of action and ability to analyze every move in order to understand what is going, bad trading decisions and money losses are the most likely outcome. Having a plan/strategy means having an outline of how much money can be made/lost in a particular transaction, when it is advisable to get out of the trade, being informed about instruments involved, etc.

4) Follow rules

Similar to having a plan, we need to follow rules. Study your social trading network rules, follow guidelines, follow good traders, learn their moves and discover why they make them. Many mistakes happen when traders don’t know basic rules of “the game”.

5) Be a trader, not a gambler

If you trade because of the thrill of it, don’t. Of course, every money investment is sort of a gamble, but social trading is more about learning the mechanisms behind it and becoming a skilled trader. At TradeCrowd, we advise you to really spend some time going through our money & risk management features before making any big investments.

6) Be informed

Information is king, so try to be as informed as possible about your transactions. If you are a Forex trader, study charts and find out what every element in it means. Many trading mistakes stem from misreading charts. The same goes for other trading tools, like signals and indicators. Talk to other traders, learn how the market is moving and strive to make informed moves.

7) Copy successful traders

If you follow traders with long history of successful wins, you’re lowering the risk of losing money. I guess it’s obvious what happens when we copy not-so-brilliant traders. So, it’s a good idea to open a demo account first, do some research and follow more experienced traders first, before choosing who to copy.

8) Know when to stop

This is a very common mistake rookie traders make: they don’t know when to close the trade. Whether it’s because they believe they’ll get lucky by the end of it, or because they believe their winning streak will last forever, knowing when to stop is a skill that has to be learned. Probably every trader learns this one the hard way.

Experts say: steer away from over-trading; it’s a danger number one for beginning traders. They say beginning traders jump too quickly into new trades, either because they’re high from a win and want to repeat it, or because they’re angry because of a loss and want revenge. As mentioned before, the road to success is not paved with emotion-driven moves.

9) Take responsibility for mistakes

Don’t blame your social network, broker or traders you are copying for your lost money. Be a man (us, women, too) and admit you still have things to learn, so make the most out of a losing situation and analyze what went wrong, so it won’t happen next time.

Let’s take a break to process what we’ve learned today and meet next week when I’ll show you how social trading networks can help you err less.