Without getting to know the market is one of the greatest disadvantages that untrained investors face after they join the market. To be very frank, the newcomers in this field have been influenced by much older participants of this market. They might have been told that this is the track that is very easy to deal with and it is easier to make money. However, the difference between both the mentioned types of investors is in their experience.
On the contrary, the inexperienced ones; barely have any idea of what leverage is. We know that there are newcomers who have done their homework properly before they even jumped on to this trading train. But the bigger portion of these newcomers has no idea of how the market looks like.
Have you ever been to a beach before? Well, we know that many of you did. The sea looks so calm and pleasant, right? But have you seen the sea when it’s storming and thundering? Have you seen the beastly shape the sea takes when the weather is bad? The investment market is like that. And the investors are just someone trying to fight the storm in the middle of the sea with nothing but a fragile boat.
So, many amateur investors may make mistakes when they join this market at the beginning. But over time, they need to keep in mind that not taking care of these mistakes can lead them to make huge losses in their trades. For this reason, they need to identify such mistakes before they make any grave decisions for their trades. Here’s a list of such mistakes that you as a newcomer might be making.
Not reading the charts
If there was an experienced sailor who knew well about the market then he will be able to survive the cruelty of the sea. Similarly reading the charts makes an investor know about the market. And knowing about the market can help him to survive this ever-changing platform. However, not reading the charts is one of the biggest mistakes that amateur traders make while they invest at least once. But this can prove to be highly detrimental to the investment and that’s why every investor should make sure to look at the charts regularly.
Think about the experienced bonds traders. They know always study historic price data to find the best trades. Here, they never take trades with emotions or gut feelings. So, learn to read the charts properly when you intend to trade any asset.
The trading plan
How would you find your direction in the vast sea without a map and a compass? It will surely be very difficult to find your destination without them. That is the same when the traders don’t use a trading plan in their trades. Not having a trading plan is the reason why many investors fail to make money. Without a trading plan, all these works may seem way lot complicated and hard to accomplish. But in reality, maintaining a trading plan can help solve them very quickly.
Many investors keep on taking newer trades in their plates, while some are way too afraid to risk their money. The first one is caused due to a sentiment of wanting more money while the latter one is not to risk the investment. Both of these reasons are some of the biggest concerns of every investor. Overtrading makes one make decisions recklessly which puts his trading account at a huge risk.
On the other hand, investors who are too scared to invest are more likely to never make the amount of profit compared to their efforts. Both these situations have an adverse effect on the trading of an investor. And you will see either of these traits among the newcomers. The best way to get rid of both of this to have proper market analysis and know the best entry levels of trade.
As a newcomer, you should keep your eyes open to whatever is happening in the market to come up with wiser decisions and maintain a proper risk management