Trading for beginners: Common mistakes to avoid

Trading for beginners: Common mistakes to avoid

Compared to the situation a couple of decades ago, trading really couldn’t have changed more. In some ways, it still has a hub in the big cities, but in others it has spread to the everyday person.

In part, this is because of advancements in technology. After all, the likes of the MT4 demo trading account wasn’t around all those years ago, yet now they are able to bring all of the necessary resources to any person who wants to develop a trading career.


Despite assistance from technology, there are still “trading basics” to follow. There are also classic mistakes which beginners tend to make and through the course of today’s article, we will take a look at some of these in-detail.

Mistake #1 – You don’t arm yourself with the proper tools

Following on from our introduction, hopefully this first message will have already been portrayed loud and clear. In short, if you are seriously looking to try and make a break into trading, you need the right tools. This doesn’t necessarily revolve just around the software we have spoken about, but also educational material and even brokers. Without these, you are at a disadvantage before you have even made your first trade.

Mistake #2 – You trade too big

A lot of you will have been attracted to the trading markets because of the potential returns. After all, these can far outweigh anything that the bank will pay you.

Unfortunately, it’s a lot more difficult than that. There are risks, and this is where budget management comes into the picture. Even if you are convinced that a particular trade is “definitely” going to pay off, still make sure that you stick to your budget. This means setting aside no more than a percentage of your overall capital for each trade (usually 10%). When you abide by such an approach, it means that you are never going to blow your budget on just one trade. It also means you can start to build up some history, and eventually move into analysing your trades.

Mistake #3 – You go on tilt

Trading can certainly bring surprises, but the way in which you react to these setbacks is hugely important. If you are the type of person who will try and claw your money back in record speeds, you’re asking for trouble. This is where you start to allow your heart to rule your head, and this is only going to end in tears.

When you do make a loss, analyse why it happened. Don’t start shoving your money without thinking properly – this isn’t what successful traders do.

Mistake #4 – You cling onto losses

Similarly to above, sometimes you have to let some trades go. Holding onto losers can cost you significant sums of money, when in reality you knew from very early on that you were going to lose money on that particular trade. Blind faith is something that can kill some trades, and sometimes you may have to act against your instincts just to keep your losses in check.