What To Watch Out For When You’re Trading

Jul 24, 2019 by

Trading should be an enjoyable way to make some money, but as with anything in life, there are things that you will need to watch out for if you want to make a success of this either as a hobby or as a career. Once you know what to look out for, you will more easily be able to avoid the problems and continue your trading progress smoothly.

Ultimately, we recommend you take an accredited trading course for long term success. However, this article will give you a preview into the kinds of things that you need to watch out for.

News

It’s good to stay abreast of the current world situation; it’s good to be informed. Most of the time, anyway. However, when it comes to the financial markets, it’s less of a good thing to know exactly what’s going on. It may seem as though you need to know every new piece of news and every movement within the markets if you’re trading them, but the truth is that you don’t.

If your trading charts can be trusted and you have had success with them in the past and if you’re trading with money you can afford to lose rather than everything you have, then the financial media and the news it brings should make no difference. All it will do is make you doubt your charts which you would never have done if you hadn’t read the news. Second-guessing yourself is one of the worst things you can do in trading because once you start it will be all but impossible to stop, and no matter what you do, you’ll always be wondering what might have happened if you had done something else.

Watching

Something that most people are going to want to avoid when they are trading is sitting in front of a screen all day watching your trades and getting over-excited or scared when anything big happens. Ideally you will want to ‘set and forget’ those trades, leaving them to their own devices until you get the result you have planned for.

If you sit and watch them all day, what will happen? Firstly you’ll quickly get bored with the idea of trading – what’s duller than looking at a screen for hours on end? – and secondly you’ll find that you begin to fiddle with your trades. You have a chart and you know what you should be waiting for, but when you’re watching you are far more likely to change your stop or end the trade completely. It might be through boredom (you feel you should be doing something if you’re watching) or nerves (you can see something potentially bad about to happen so you wade in to fix it), but either way you are potentially ruining the ideal trade.

In this case, what you don’t know really can’t hurt you – don’t watch your trades.

Wanting More

Greed, sad to say, is a big problem in trading. It’s so tempting to push just a little more, then a little more, and then – why not? – a little more. But this is where things can so easily go wrong.

Trading is about making money; it’s unlikely many people would do it if they weren’t getting a reward at the end. However, when you start to get greedy and push things to their extreme, big problems can occur.

You might start to trade with money you can’t really afford to lose, for example, and this is a huge issue when you lose – you might effectively be destroying your trading portfolio in one fell swoop and, worse, you might be setting yourself up for financial problems in other areas of your life. If you traded with too much and lost, would you be able to afford the rent or mortgage? What about your other bills? Food? You can see why being greedy and going too far too fast is problematic. Stick with your plan and make small but regular returns. It’s a much more enjoyable way of doing things in the end, even it doesn’t seem too exciting.

Too Many Strategies

In trading the best thing you can do is to have one single trading strategy that you maintain, tweak if need be, but otherwise stick to. It might take a little time to create such a strategy, but once you have it, you’ll find it works and that you win more than you lose.

If you keep switching between different ideas, never giving one a long enough chance, you’ll never find one that works for you. This will be frustrating, and it won’t help you to be successful; switching around is more likely to lose you money than win you anything, at least in the long term.

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