Beginners often make many basic mistakes that quickly lead to account losses. Typical mistakes include trading based on emotions, lacking a system, and sitting in front of the screen all day to 'catch' trades. The article below summarizes common mistakes made by new traders and corresponding solutions for you to learn from.

1. Lack of Trading Plan

Trading without a plan is equivalent to gambling. Investopedia notes that successful traders always adhere to the motto 'Plan the trade and trade the plan' – meaning that a trading plan must be established in advance. In contrast, newcomers often enter trades based on intuition, failing to clearly identify entry/exit points and profit targets, leading to erratic results.

According to the Trust Institute, 'lacking a trading plan is equivalent to gambling', as there is no specific strategy regarding goals and risk limits. To remedy this, build a clear set of entry/exit rules – for example, predefined technical conditions or price levels for entering trades, as well as profit-taking and stop-loss levels for each trade.

2. Not Setting Stop Loss Orders

Many new traders hope the price will bounce back instead of cutting losses in a timely manner. In fact, Investopedia warns that unsuccessful traders often enter trades without knowing when to exit. As a result, after each 'cast of the net', they can only hope for a price recovery. To combat this mentality, it is essential to use stop-loss orders.

Experts recommend risking only 1-2% of capital for each trade and always setting stop-loss orders to protect the account. For example, the 1% rule from Investopedia advises not to risk more than 1% of the account balance on a single trade; if the account is $10,000, you should only accept a maximum loss of $100 on that trade. Adhering to this principle will help you avoid losing all your money after a few losses.

3. Overtrading

This is a mistake when traders place too many continuous orders, often due to greed or fear of missing out (FOMO). The Trust Institute emphasizes that 'overtrading occurs when traders place too many orders in a short period, often due to emotions or FOMO. The quality of orders must be prioritized over quantity.' This behavior increases transaction fees and leads to less objective decision-making.

LuxAlgo also warns: 'Overtrading can destroy profits. It occurs when you open too many trades without a clear plan, often driven by emotions such as FOMO or greed.' To avoid this, adhere to a strict limit on the number of trades per day and only trade when signals fully meet the established conditions.

4. Getting Caught Up in FOMO (Fear of Missing Out)

When prices are rising well, many newcomers tend to jump into trades without clear technical analysis. They fear losing an opportunity (fear) or become greedy, leading to entering trades too late and frequently incurring losses. The Trust Institute warns that traders who constantly 'close trades too early out of fear and hold trades too long out of greed' will erode profits.

To overcome FOMO, it is necessary to cultivate patience. According to Edgewonk, skilled traders often wait for high-confidence signals rather than rushing into trades due to fear of missing out. In other words, only trade when market conditions truly align with the established plan, avoiding the herd mentality.

5. Lack of Patience

Desiring quick profits often leads new traders to adopt the mindset of 'short-term gains supporting long-term losses.' Unrealistic expectations such as 'making double profits in just a few trades' can easily lead to account depletion. According to the Trust Institute, expecting an account to double overnight is 'not only unrealistic – but also dangerous; trading requires patience, discipline, and consistency. Profits come from consistently making small smart decisions.'

Edgewonk also advises not to try to achieve miracles in a few trades but to accept steady growth over time, avoiding the rush to rapidly increase the account. Instead of racing for profits, pursue a consistent method that allows profits to accumulate gradually.

Solutions to Improve Trading

  • Clearly plan before each trade: Determine entry/exit points, profit targets, and stop-loss levels for each order. According to Investopedia, successful traders always adhere to the rule 'plan and trade according to the plan'.

  • Strict risk management: Always set stop-loss orders and limit risk to no more than 1-2% of the account per trade. This helps protect capital when the market is unfavorable.

  • Only trade when conditions are met: Limit placing unnecessary orders. According to LuxAlgo, prioritize 'quality over quantity' of trades. Set a limit on the number of trades per day and do not chase the market if it does not meet entry criteria.

  • Maintain discipline and control emotions: Do not let FOMO influence decisions. Be patient, wait for clear signals, and stick to the established strategy.

  • Cultivate patience and consistency: Accept that profits accumulate over time for sustainability. According to the Trust Institute and Edgewonk, each small, correct trade repeated will lead to long-term success. Focus on discipline and the process rather than quick wins.

In summary, common mistakes when starting to trade often stem from a lack of planning, neglecting risk management, and being driven by emotions. By building a clear strategy, adhering to stop-loss rules, and cultivating discipline, you can minimize these mistakes. The referenced expert sources have emphasized the importance of a trading plan and risk management. Be patient in learning, practice methodically, and gradually build serious trading habits to achieve more stable results. $BTC