It’s a well known fact that 95% of “retail” traders (i.e. the small speculators) will lose money trading the financial markets. Little wonder then that small speculators are referred to as “dumb money” by investment professionals and monitored as a contrarian indicator for future price direction.
It is not simply that the little guys choose the wrong trade, there are a number of classic mistakes that are repeated over and over again that mean losing is all but a certainty, leaving the 5% of winners and the professionals to clean up.
1. Not Planning Your Trades
It is not sufficient to look at a particular market, choose to either buy or sell and cross your fingers hoping for the best. You must devote time to study your chosen market, decide whether the prevailing trend is up or down, what timescale this trend is over and where the points of support and resistance are.
You have to plan where you are going to buy or sell, where to place your stop loss and most importantly where to exit the trade. Then, once the trade is planned and executed, you must show discipline – you made the trade for a good reason with solid justification, so any changes need equally solid justification.
2. Lettings Losses Run and Closing Winners Too Early
There is a tendency to become too emotionally involved with a trade once it has been placed, and to want the trade to succeed too much.
Therefore, novice traders tend to let losses run too long, by either widening stops or ignoring signals that the trade is going wrong, in a desperate attempt not to lose money. All that happens is when you do eventually lose, the loss is a huge one.
Learn to take small losses and you won’t ever get smashed by an enormous loss that blows you out of the water completely – the markets will always be there tomorrow, as long as you still have capital, you are in the game.
On the flipside, novices tend to get over excited when their trades move the right way and into a profitable position and the tendency is to close the trade out earlier than planned to “bank” the profit. Of course there are times when this is the right course of action, but if your plan said close out at a certain point, unless something has changed, stick to the plan.
3. Chasing Losses
The other classic trading mistake is to “chase” losses – after taking a loss on a trade (hopefully a small, manageable one - see above!) the natural urge is to “put it right” by getting straight back into the markets and winning the lost cash back as soon as possible.
As we know, the only way to trade is by planning each trade and executing it carefully, jumping back in to the markets after calling a losing trade is NOT going to work.
The best advice is to take a few days out of the markets, regroup and plan your next trade.
4. Overtrading
Everyone loves the thrill of placing a trade and entering the market – many traders tend to overtrade, placing too many trades that haven’t been planned properly just to be “in the game” and part of the action.
Overtrading means more money is lost on commissions and spreads and the likelihood of losing is higher as trades are more frequent.
5. Staking Too Much
Money management is the key to real success – too many traders risk far too much of their trading pot on each trade, looking for the “big win” rather than gradual and controlled growth through smaller more manageable trades.
If you go seeking the “big win”, more often than not you will end up finding the “big loss” and then its game over.
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OUR GOLD CURRENT TRADE
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SLD at 1316.23 stop 1326.00 On Aug 09
TP1 1300.00
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The Gold Price & Trend Predictions blog made for gold traders to find good news and to provide the traders with daily price predictions and to learn how to trade the Forex Market for free.Just pure learning! It will be of great fun.You can judge by yourself the quality of information that I will be giving you in my blog.
Welcome to my blog where you can learn how to trade the Forex Market for free.The material is all created by myself and not copied from anywhere. There is a lot yet to come since there is a lot that you need to learn, and there is a lot that I need to share with you! So please just be patient – it will be worth it.You can judge by yourself the quality of information that I will be giving you . So just go now and start learning!
Below is a quick guide of how this website is structured, so you can find what you are looking for fast. Remember that I update the pages every day so either check back often.
In this section you will find quite a long article of what Forex is all about. If you are a beginner, this is a must read. It explains in detail what is required to start trading, what you should do and not, typical traps to avoid as a beginner and a lot of valuable information which you as a beginner must digest and learn prior opening any Forex account with real money.
In this section you will find your road map on how to become a real successful trader couple of months as from today.
In this section you will know the 3 major areas – Technical Analysis, Fundamental Analysis and Trading Physcology.
In this section you will find a gold mine of information about the technicalities of Forex. We will start from the very basics covering all the Forex jargon words which you will be hearing every day and we will be taking you up to the level required to finally learn to trade like a pro – technical analysis, also found in this section.
In this section you will see the tips that will help you stay away from crap forex products, which unfortunately the Forex market is invaded with.
This section has a very detailed article on how to avoid being scammed in this ruthless world of Forex. I will explain in detail six tips that you need to look for prior purchasing any products. Even though most of the time you may claim your money back,the time wasted is never returned. You should have used that time to learn how to trade! Read it!
YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
Do your own due diligence.
No one knows tomorrow's price or circumstance.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
King Regards
