#TradingMistakes101 Common trading mistakes you should avoid as a trader

Trading seems very simple. After all, the price can only go up or down, so traders just have to choose the right direction and wait for the money to flow, right? Well, not quite.

The world of trading can be full of surprises for those with big ideas but little preparation. When unprepared traders fail to recognize that mistakes in trading are part of the learning process and can, in fact, turn a person into a successful trader.

1. Trading without a trading plan

Every trader needs a trading plan. If you don’t have one, it’s time to get one, and the best way to start is by reflecting on your trading goal.

2. Overtrading too soon

Due to the potential of making money through trading, the temptation, especially for novice traders, is to push the limits in hopes of gaining larger profits quickly.

3. Emotional trading

We’ve all experienced that feeling when you’re on a winning streak and feel like you can’t do anything wrong. When traders apply that to trading, it’s usually when you experience a string of profitable trades and feel like you’ve got it mastered. But all winning streaks come to an end, and it’s crucial to remember that because, in the end, there’s money at stake.

4. Guessing

If traders enter a trade without any preparation, they are not really traders.

In fact, trading without putting in the effort to educate oneself or understand how the markets work is more like walking into a casino, betting money on roulette, and hoping everything goes well.

5. Excessive leverage

The ability to use leverage is one of the main attractions of markets like forex. Indices, precious metals, and cryptocurrencies. Leverage allows you to trade with much larger positions even with a smaller investment capital.