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Trading, as a full-time occupational opportunity, has loads to offer. Besides the fact that you don’t have to care about your employees, the other big advantage, this opportunity brings us, is the choice of your time and place you want to trade at.
Naturally, trading offers a number of other advantages. However, as it goes with other jobs, there’s nothing for free. In case of this job opportunity, the traders should not only know their system and be prepared for impossible scenarios, but they should also try to avoid bad trading habits that may result in significant losses.
Successful traders are not only known for the consistent achievement of profits, but at the same time, there’s hard work, discipline, avoidance of repetitive mistakes and so-called “unforgivable” trading sins we will name and discuss in our continuing series below.
”Unforgivable” trading sins
1) Trading without planning
A trading plan tends to be one of the most important parts of profitable trading. However, the majority of beginning traders often underestimate it, as they believe (falsely) that the profitability may be achieved only and purely by an appropriate trading strategy.
Now, maybe you’re asking what’s the difference between a business plan and a strategy? There’s a huge difference!
A trading strategy is related only to the execution of trades (condition, under which a trading position is open, where SL/TP is placed, conditions under which a position is closed, …).
A trading plan , on the other hand, is an extensive procedure from the beginning to the end. It contains not only the mentioned trading strategy, but also a selection of an appropriate broker, trading instruments, etc. In simple words, a trading plan should contain answers for almost each important question (what broker the trader has chosen, which instruments are going to be traded, what strategy is going to be used, naturally also the strategy conditions, how much the trader is willing to risk until he considers any change to his strategy etc.).
2) Opening of other positions for the purpose of loss elimination
In the event any open position is not developing well and the chosen trading strategy does not include multilevel trading, the worst sin such unexperienced traders commit, tends to be the opening of other positions to eliminate their loss. Unfortunately, this approach works only for a short-term period, as when the time goes, always a situation occurs, when markets refuse to return to the needed price level and the loss is going to impact the account markedly more than if the stop loss was allowed to close the first position.
3) Trading of extreme volumes
A big and very frequent sin, resulting in ruining a trader’s account, is the trading of large volumes, for which the trading account is not sufficient. The right choice of trading volume tends to be the main point in avoiding excessive risk in investing and trading. Yes, it looks awesome, when the trader sees that he has multiplied his account in a couple of days. Unfortunately, this works only by the time when a wrong position is open, resulting in ruining of the entire account.
4) Moving of take profit levels
If the market moves as expected, traders tend to be full of energy, resulting often in even irrational behaviour. One of such feelings could be, for example, readjustment of take profits only on the basis of personal feeling (“it will reach that price level”). In numerous cases, such actions could result in the elimination of the entire profit or even in jumping to losses.
5) Change of strategy during active trading
Sometimes, the circumstance and force majeure require readjustment and change of the trading strategy. That’s nothing new for any trader. Unfortunately, this change of strategy happens often at the moment when trading positions of the former trading strategy are not closed. As a result, unexpected situations may occur that should be rather avoided.
If you would like to try out trading with top tier trading conditions and professional forex broker, don’t hesitate to try our demo account that may be open on our website completely for free and free of any risk: www.purple-trading.com
We wish you many profitable trades!
About the Author
Team Purple Trading
Purple Trading is a true and 100% fair ECN / STP forex broker providing direct access to the real market. High speed orders execution, no trade-offs, no limits for any type of trading, the most advanced trading technologies. Explore more about Purple Trading at www.purple-trading.com .
CFDs are complex instruments, carrying a high level of risk of losing the entire investment as a result of leverage. 70.5% of retail investors lose their capital when trading CFDs with this provider.
(This value was set within the period from April 1, 2018, to March 31, 2019. You should carefully consider if you understand how CFD instruments work and if you can undertake such high risk of losing you initial investment.
Trading forex exchange with margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. You could lose part or all of your initial investment and therefore you should not invest money that you cannot afford to lose. Seek independent advice if you have any doubts.
Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice. L.F. Investment Limited will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
Purple Trading is a trade name owned and operated by L.F. Investment Limited., a licensed Cyprus Investment Firm regulated by the CySEC lic. no. 271/15.
