Rookie Mistakes – Novice Trader
When you’re just starting out as a trader, you may need to be cautious. There are so many pitfalls that novice trader’s fall into – which can often wipe out their entire capital. Many of these mistakes are completely avoidable – but novice trader’s keep making them again and again. If you’re just starting out as a trader, here are some mistakes that you may need to avoid.
Not placing stop-loss orders
A stop-loss order is very simple. It’s in order to exit a position once your losses become too large. If you don’t place a stop-loss order, then a quick change in the price of an asset may lead to huge losses.
Averaging up or down
Conventional wisdom is that averaging up or down can help you to recover from a losing position. The idea here is that if you make an investment and it goes the wrong way, then putting more money in may mean that your average loss is smaller and that you’re going to recover more quickly when the price of the asset reverses. However, this only works if you’re a long-term investor with big pockets. In the short term, it’s surprising how trends continue – and the chances are that you may be forced to exit at a huge loss before the market ever turns.
This content is restricted to site members. If you are an existing user, please log in. New users may register below for FREE.