There are avoidable mistakes in trading while there are others that are quite tough to avoid. What’s very important is to not repeat the same mistakes all over again. The use of a trading journal in the MetaTrader 5 trading platform, can help you easily check your past successful and unsuccessful trades. More importantly, you should know the 10 most common mistakes of traders that you should avoid.
Not researching about the market
If you are one of those traders who are merely opening and closing their positions out of gut feel, then you are looking for trouble. Although this tactic can hold some good results, the results are not long-term. Just a few wins don’t mean that you are a successful trader already. You should aim for huge wins, long term.
Therefore, if you want to become a profitable trader for a long time, you should understand the market that you open a position. What is the degree of volatility? Is this an over-the-counter market? Is this an exchange? Is the market stable? Know these things first.
No trading plan
Trading without a plan means that you are destined to lose. A trading plan contains your strategies, the capital that you want to invest in every trade, and the time that you want to commit.
There will always be a bad trading day. During these times, you might get tempted to defy your trading plan. But you should not do it. This is a mistake and will only bring disaster. Your trading plan is the core of your position, if you change it, you are changing the direction that you should supposedly take.
Depending on the software too much
There are indeed a lot of benefits offered by trading platforms like MetaTrader 5. However, you should not solely rely on this software in opening and closing your positions. You should also check your positions from time to time so you will know the activities in the market.
Not cutting losses as soon as possible
One scenario that is very common nowadays is that trading who’s on the losing end refuses to let go of his position because he is hoping that he can still cope with his losses. But this is very wrong. By doing so, there’s a huge possibility that your capital will be wiped out and you will be left with nothing.
Although there are losses in the market that are inevitable, you can utilize stops to avoid huge losses whenever the market goes against your predictions.
No knowledge about leverage
One of the advantages of Forex and CFD trading in MetaTrader 5 is leverage. It is really helpful especially if you cannot pay the full amount of the asset just like when you trade stocks. It is a very attractive prospect and it seems like there are no disadvantages to it. But when you understand how it works, you will know that it is also important to be wary when using leverage because it mirrors your gains and losses too. As much as possible, know the right leverage ratio for your trade to avoid wiping out your account.
