Fool me once—shame on you, fool me twice—shame on me. That is a popular adage which shows how embarrassing it is to make mistakes. How can they be avoided in the online trading arena?
Common Mistakes When Trading CFDs
Even the best of the best at times have bought or sold accidentally. To err is a human trait. But there is something to be said for not learning all our lessons first-hand. There are many common mistakes we can see clearly second-hand, saving us time, emotional trauma and most importantly—money. Let’s have a look at some trading blunders.
- Yes you are working essentially for profits, but it is a process and being blinded by the money you are profiting at XTrade is a sure way to fail. Knowing when to take your profit at a modest but positive amount can all add up in the long run. Move on.
- Trading for entertainment. Trading in XTrade may sound like a lot of fun, but if you are going to treat it like a joke then the market will have the last laugh. All your money can be gone extremely quickly if you do not treat your trades as strictly business. Be professional and the market will reward you accordingly.
- Zero to hero attitude. It is unlikely that you will have amazing beginners luck in your first XTrade session. This kind of attitude is exactly what pushes new traders to overtrade. If there is no good trade to be made, do not use up useful leverage under the lure of free equity on offer. Form discipline and other good traits until you recognise a good trade, observe and have patience. Your time will come, no need to peak too early.
- Opening too many CFD positions at once. A rookie mistake. It is true that having a small number of short positions open at any given time will help you to spread the risk, but if you open many positions at once, it essentially will consume your investment as it would be wildly out of control. Goodbye money, hello poverty. The straw that breaks the camels back would only have to be one trade gone bad. That is certainly enough to wipe out your capital. When it comes to spare cash—the more the merrier!
- Not setting limits. You have to have a plan and stick to it. Set targets and get out when you reach them. Don’t wait around for a few more bucks, is the target reached? Then follow the exit strategy.
Don’t Give Up
Even if you have fallen into one or several of the said pitfalls in the past, trading definitely has a steep learning curve. You need to admit when you have made a wrong turn and go back to the last point of successful trading with your tail between your legs. But whatever happens, do not give up. Trading is going to get better for you with more experience and learning from the experience of others, otherwise nobody would be able to make a living from it. Work on your plan some more and happy trading!