3 Mistakes To Avoid When You Trade

3 Mistakes To Avoid When You Trade

Things have become a lot simpler with just a click of a button. Digitalization and automation have taken the world by a storm and so has automated trading. Automation in trading has helped many to enhance their returns on investments. However, it is necessary to develop a good and consistent strategy that promises effective results.

One of the main reasons why automated trading has an upper edge over manual trading is because of the ability of the automated robot or the math algorithm that has the potential to enter and exit different trade positions once they are pre-determined based on the set criteria. However, mistakes do happen. Here is a look at the top 3 mistakes that you should avoid while trading, be it in the manual mode or using the automated robot.

  1. Do not tend to average down.

Although you may be wary and not intend to average down, there come situations that push traders into this pit unknowingly. The main reason why you are pushed into such circumstances is that you might be holding onto a badly losing position. Trading offers only very limited opportunities, hence traders are in a rush to seize the maximum. In such cases, you are at a risk of losing both your money and time and in such cases you tend to average down. Sometimes it may not cause much damage and result in a margin call. However, it is not considered a good practice. Be sure to exit losing/bad trades at the earliest.

  1. Do not trade as soon as you hear the News.

It is only natural to trade based on what you hear. The moment the big news drops, the market is hyperactive with major spikes in the trends almost instantaneously. You might also be tempted to jump right in and make some big bucks. However, experienced and mature traders call this act as undisciplined trading. Always ensure that you practice planned disciplined trading to avoid major losses and to earn systematic profits. Be sure to check the price volatility of your assets and allow it to subside to a normalized trend before you take the plunge. Do not go by this review or that news and spoil your chances of winning.

  1. Do not trade on holidays

This does not discourage you from trading over the weekends but what it means is that try to avoid certain days of interest such as on Christmas Eve, Christmas, New Year’s Eve, New Year, and others. You might see it as lost opportunities but these days are usually challenged with major volatility and huge volumes, which will land you on unpredictable price fluctuations. Therefore, be prepared and anticipate such unusual market conditions.

Different people commit different mistakes. However, the key is to learn from these mistakes and progress ahead by learning newer strategies to tackle the market. There are many different opportunities to be seized and it is not going anywhere. Hence, practice disciplined trading by trading at the right time in the right course.