Why most of the new traders make mistakes?
Fear is the reason behind most of the trading mistakes new traders make. Be it in terms of losing money, missing out potential profits or uncertainty, fear always comes along while trading. Here are a few tips on overcoming such fear…
Analyze your trade setups
No trading strategy is a full proof guarantee of profits. Every trader needs to realize that no amount of analysis can fully eliminate the uncertainties of trading, only then can he trade freely without fear. Deciding what trades you should take to is one of the biggest dilemmas for a new trader. Analyzing your previous successful trades and calculating their probability of repeating can help eliminate such confusions. Then, all you’ll have to do is to wait for a trading setup. If you are unable to do this, then you’re doing nothing but gambling even when there were high chances of the stocks generating high returns.
Prepare yourself well
Fear itself is afraid of confidence and preparation is what creates confidence. You can not make a living out of trading if you do not prepare and are dependent on others for trading. If you’re doing nothing but following others, you will never be able to overcome fear because there is always a plethora of aspects that are left unaccounted Before beginning a day, you should have the entire plan ready for the list of your stocks. You should be well aware of all the key areas of support and resistance, the amount of daily loss and what the float is. Prepare for as many setups as you can.
The risk in proportion to your account size
Perhaps, the biggest cause of fear while trading is to risk much more than what your account allows. For an instance, if you’re trading a Rs 15000 account on 1500 shares of X, you’ll find yourself shaking in fear. Youll either not stop where you’re supposed to or give up too early. It is always ideal to roll out 1-2% of your account to let the trade play and not put all the money at risk.