The trading industry in Singapore can be wildly profitable to those who have a knack for predicting the markets. It’s why so many people turn to trade as a career or a way of earning a side income.
Trading requires two things: capital and requisite knowledge on how to invest your money. While the first factor is easy enough, it’s the knowledge that takes years of practice and experience to develop correctly. There are many nuances involved with trading, which made compiling this list difficult because rookie traders don’t make one common mistake(visit this site to find out more).
What we’ve done here is give you five of the most common mistakes that rookies make when they’re starting – hopefully, after reading about them, you’ll know what not to do so you can start on the right foot.
Taking unnecessary risks with Your money
As it goes, when you don’t have experience in this field, there will be times when you make bad choices with your investments. That’s normal, and it happens to everyone. However, what do rookies end up doing? They take that as an excuse to double down and invest even more!
Unfortunately, the result is always the same: significant losses. Some traders believe that they should never cut their losses because it’s better to “ride out” a bad investment than sell it and take a loss. Yes, there is some merit to this approach, but if you’re new to trading, then that’s not something you want to be doing just yet because you simply don’t know how severe your losses will be. It could be 5% or 50%, so why risk-taking more damage?
You do not understand technical analysis.
Technical analysis (or TA) is one of the main tools at any trader’s disposal. The problem with newer traders is that many of them don’t even understand what technical analysis is – all they see is a bunch of squiggly lines and patterns that they don’t understand. You can’t rely on technical analysis to do all the work for you, but it is an essential tool – so if you aren’t familiar with TA, then it’s something you need to educate yourself on as soon as possible.
You are only using one strategy.
While most rookie traders know enough not to take extreme risks with their money, others stick to one strategy and try to ride that out until the market changes or runs out of capital. A good trader knows that there isn’t just one way of trading any financial instrument – there are tons of different methods, and certain ones will be more suitable than others depending on what kind of market we’re in.
Thus, one should not stick to a single trading style but instead try out as many as possible.
Getting emotionally involved
They say that trading is a zero-sum game because there’s a winner and a loser at the end of every transaction – no money is ever created or destroyed; it simply changes hands. And while this may be true from an objective point of view, some let their emotions get the better of them when they’re trading.
That only leads to bad decisions because you can’t make sound judgments if you’re caught up in the heat of the moment. Wait because emotions have no place in trading when you feel upset about making a loss, or you’re incredibly excited about hitting your first big windfall.
You do not keep track of your transactions.
It’s one of the most common mistakes that rookies make, mainly because they’re not used to doing it. When you’re fresh out of school or college, you don’t go around logging every single thing that you do – you don’t need to! However, trading requires that you record your transactions and keep track of them because there may come a time when you need proof of what happened (for example, if you need to file for taxes).
That means keeping records like buying and selling dates and prices; not only should these be written down, but they should also be stored so they won’t get lost over time.
