10 Mistakes that Newbies Should Avoid When Starting Currency Trading Online

When you start trading, you cannot avoid losses completely. But you can minimize them thanks to avoiding these common mistakes.

Online trading tips - brain chemicals - image thumbnail

When newbies make their first steps in online trading, mistakes are inevitable. Here is the list of most widespread blunders that novice traders make. Hopefully, it will help you to avoid excessive risks and losses!

1. Trade with Your Last Savings

You should never trade with money that you desperately need to buy food and pay your bills. Also, you should never borrow money for trading. You should start currency trading online only if you have money that you are not afraid to lose.

2. Have No Background Knowledge

Trading is not a lottery or an online casino. It is a business that requires certain expertise. Plenty of valuable information is available online for free. You can read articles on trading strategies, get to know the pros and cons of different platforms and learn the basic terminology of the industry.

It is not necessary to pay for online or offline courses right away. Courses that are created and conducted by seasoned professionals will help you to get a lot of precious information. But you will need this expert knowledge only after you gain experience. As a newbie, you can get to know everything you need at no cost. Plus, you should learn to tell true experts from info hustlers who make students pay but do not teach them anything important.

3. Build No Strategy

To make money, you need to buy and sell assets systematically. Random actions will bring only losses. Newbies should select a strategy that involves minimum risks. It might bring less profit than a riskier approach. But you will be able to switch to a more advanced strategy later when you gain experience.

4. Trade Too Many Assets and Positions

This is the easiest way to lose focus. It is difficult to monitor several markets at once. The more assets and positions you have, the higher your risks to make silly mistakes.

5. Do Not Rely on Technical Analysis Tools

The human brain is imperfect. Even the smartest and most experienced traders cannot calculate as quickly and precisely as a computer. Technical analysis will help you to assess the situation on the market and notice signals on time. These signals will enable you to understand whether the price of a certain asset is about to go up or down. You will be able to take measures, make money and avoid losses.

6. Blindly Trust the Technical Analysis

A signal might show you that the price of an asset is about to increase. But in fact, it might decrease or remain the same. The technical analysis shows you only a probability of a particular situation. It never gives 100% guarantees. To make your forecasts more precise, you should rely on multiple analytical tools. The more tools tell you about the likelihood of a certain event, the higher the chances that it will be true.

7. Trade Without a Time Frame

When applying technical analysis tools, you need to set a time frame for them. An optimal interval for newbies is around 1-3 days. You will analyze the price fluctuations of the asset during this period and take action. Avoid choosing the shortest time frame of several hours. This strategy is called scalping and it is suitable only for seasoned professionals.

8. Never Use Bots

Bots save traders time and nerves. They will keep buying and selling 24/7, while you sleep, eat and do physical exercise. Bots have certain drawbacks: their design might be substandard, they might go out of order at the least opportune moment and you need to pay to use them. But in general, they are extremely useful. It is close to impossible to make serious money when relying only on manual trading.

9. Frequently Move Stop-Loss Orders

Such orders are one of the most common instruments of automated trading. They prevent you from losses that you might suffer when the price of an asset fluctuates too drastically. The trickiest part of using this tool is to determine the correct price limit. Once you set it, you should not change it too often — otherwise, it will ruin your trading strategy.

10. Do Not Follow the Trading News

You should monitor the news of the spheres that are related to those assets that you trade, be it gold, Bitcoin or anything you wish. And of course, you should be aware of the main economic and financial news. The price of an asset might skyrocket after just one announcement — and you should use this opportunity very quickly.

Final Thoughts

These recommendations will come in handy when trading nearly any assets on nearly all platforms. Be cautious, avoid stress, and always remember about common sense. Keep on learning and evolving every day. Many people manage to turn trading into their primary source of income — if you wish, you will be able to do the same too.

Interesting Related Article: “5 Best Stock Trading Apps for 2021