In the trading world, success is not measured by the number of trades you open, but by your ability to stay in the market and manage risks wisely. Here are three common misconceptions among novice traders, and why they lead to inevitable losses:
1. The illusion of "capital recovery"
- Misconception: "I'll just wait a little, and prices will return to where they were."
- Reality: Markets do not adhere to your expectations, and the opposite trend can continue for months. Holding onto a losing trade without a clear exit plan often leads to a zeroed account.
- Solution: Using a Stop Loss is a necessary defensive tool, not a sign of weakness. Accepting a small loss is better than waiting for the unknown.
2. Overconfidence in instant forecasts
- Misconception: "This trade is guaranteed!"
- Reality: There are no guaranteed trades in the market. Even the strongest analyses remain probabilities. Making decisions based on emotion or haste can wipe out capital in minutes.
- Solution: Create a Trading Plan before entering the market, specifying your entry point, profit target, and stop loss. And be prepared for the possibility of the trade failing.
3. Emotional drift in buying #PEPE