Content source: Wechat public account Huiclassroom
If the road of foreign exchange trading is a path for investors to learn from, there are more than 81 difficulties that need to be overcome if they want to pass the customs and finally make a stable profit.
There are tests on IQ, mentality, dedication, luck and other aspects. If you do not do well in a certain aspect, you may leave frustrated.
Relevant statistics show that without proper risk management tools and robust trading strategies, 95% of novice traders ruined their first account in less than 6 months, and most of them Most are not in their 4th year of trading.
We will share the 10 problems often encountered by trading novice in the statistics, and remind the exchange friends, and hope that you can pay attention to it and solve it as soon as possible.
Problem 1: Trading With Emotions
If the technical level can make you profitable in a few transactions, emotions and mentality can determine how far you can go on the road of trading.
Some traders, no matter how high their technical level is, if they cannot cope with the pressure of trading and trade with emotions, they will eventually fail. Therefore, Huiyou often say that there is nothing more dangerous than making trading decisions amidst fear, disappointment, anger, excessive optimism, and greed.
How can I avoid the influence of emotions?
Being an emotionally free person takes talent, and most people struggle with it. The more effective way to resist the influence of emotions is to make a trading plan and strictly implement it. You must stick to the trading plan for a long time, even if you cannot make a profit under the plan.
Problem 2: Overtrading
Novice traders are indifferent to over-trading at the beginning. You can see that many people trade 1-10 lots, and the life of the first account does not exceed 3 months.
Some traders do 10 currency pairs at the same time, and can trade hundreds of times a day. But in fact, quantitative changes in transactions may not necessarily lead to qualitative changes, but large quantities mean big risks.
Trading is like an extreme sport. It requires all your energy and concentration to improve your level, and it requires proper rest and a balance between work and rest.
The market will still exist, wait patiently for your opportunity. I hope you don't over-trade with a gambling mentality, do a good job in every transaction, and increase the winning rate of the next transaction.
Problem 3: Not managing risk
If you don't understand what risks exist in the trading market, let alone risk management. The market price changes hundreds of times in one minute. If you trade 10 lots at will and use 100 times the leverage, the price changes by 10 points is 100 US dollars. If you accidentally make a wrong judgment, you will lose hundreds to thousands of US dollars. Of course the risks are great!
Many novice traders do not realize the existence of risks until the first account is liquidated, and start to pay attention to risk management.
When you do risk management, you should not only control the leverage and the size of the position, but also ensure the safety of the account funds according to the trading strategy, calculate the risk and return of each transaction, and determine the risk ratio you can bear.
Problem 4: Overconfidence
Overconfidence will make you underestimate the risk of trading, and even fight against the market. However, the idea of defeating the market is destined not to go far, and investment transactions should not compete with the market.
Generally, after being in contact with trading for a period of time and having several profitable experiences, traders will become a little overconfident, overconfident, take risks in various transactions, and lose all their earnings.
Therefore, when you have a little achievement, don't think that you have mastered the holy grail of trading, and test the market unscrupulously. There are people outside the mountains, and there are people outside the mountains. It may be that you are lucky. Avoid overconfidence, and you can trade strictly according to your own trading plan.
Apprenticeship trading is a shortcut to quickly gain profits, but it is easy to rely too much on the master. The master is not omnipotent. If you don't learn and comprehend it yourself, without the master, you will not know how to trade.
Especially the copying behavior is a pure imitation behavior. If you don't understand the basis of the transaction, you can never learn to trade.
If you have time, you can learn and master trading skills by yourself. If you don’t have time, you can directly find reliable asset management. Relying on others to get something for nothing will sooner or later hurt you in trading.
Problem 6: Adding too many technical indicators to the chart
Seeing that the charts shared by some traders are colorful and complicated, with a bunch of technical indicators, it reflects from the side that these traders may not understand the purpose of these indicators.
In a useful trading system, trend, momentum, and volatility indicators perform their respective duties. Stacking too many indicators and making the system too complicated will make the transaction worse.
Not only indicators, but also a lot of information such as strategies and news that traders are exposed to. Too much information may be counterproductive, affect your judgment, and make you not know what you are doing.
Extremes lead to opposites, too much of something may be the same as nothing at all. You can study many technical indicators, but it is more appropriate to focus on 1-3 when using them.
Problem 7: Trading Against the Trend
Cleverness is misunderstood by cleverness, which roughly refers to trading against the trend. Traders who have just entered the market may follow the classic homeopathic trading, but as they become more experienced, they start to try to find the top and bottom of the market, trying to get a better opportunity to enter the market.
But even veteran traders with relatively high skills may not be able to predict correctly, let alone you who may not be able to make profits when trading with the trend?
It is easier and safer to trade with the trend with most people than to enter against the trend.
Most people start trading without having a good understanding of the trading market. For example, with little understanding of the trading platform, some people fall into foreign exchange scams.
Some people start depositing money without even knowing what MT4 is. If you lack a certain amount of common sense in the investment market, you will definitely suffer a lot. When you enter any new field, you should have a general understanding first, so that you will not regret being too stupid to be cheated.
There is another type of Huiyou who is obsessed with technical aspects and ignores other knowledge. If you understand the nature of market price fluctuations, you will not ignore important fundamental information and be obsessed with technical analysis. Knowledge of the psychological and emotional aspects of trading is also important.
Question 9: Trading News
When important news is released, the market may face great fluctuations, and there is certain uncertainty in the price direction. Experienced traders can restrain themselves from being greedy for a momentary big market, but novice traders are often involved in this difficult situation. In the big fluctuation of winning.
News trading is highly risky and speculative, price movements are difficult to predict, and market spreads widen and slippage increases. Don't enter the market greedily because of temporary excitement. If you are not sure, it is best not to trade for novices.
Problem 10: Never keep a trading journal, can't sum up experience from previous transactions
A trading journal is a great tool to help you recognize your weaknesses and improve your trading. However, many trading novices think it is more troublesome and have not made records.
The trading log is actually not complicated. It is a simple record of each transaction. The key is to help you determine whether you have followed your trading plan and how this affects the final result.
How can there be progress without reflection and summary? So if you really like trading, you have to look back and reflect based on your trading log every week or every month, and find the cause of the loss, so that you can slowly move towards profit.
The above is today's sharing. There is a good saying that trading is both an art and a science. The market is constantly changing, and all rules may become invalid, but when you find and follow a certain rule, you can also trade within a period of time reach a peak. I hope you can all plan your transactions, trade your plans, and successfully cross the novice period.
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