8 Most Common Trading Mistakes

Trading in the financial markets can be rewarding, but it’s not without its pitfalls. Many traders end up losing money. In this article, we explore the 8 most common reasons why traders find themselves in the red and offer insights on how to avoid these common trading mistakes.

1. Lack of Knowledge

Some traders jump head-first into markets with limited understanding and knowledge. They don’t take the time to educate themselves about the financial instruments they are trading or how markets ebb, flow and change over time.

Anybody can make a few successful trades in a row. Sometimes the markets just move in your favor. However, this is more akin to gambling if you have little idea what you’re doing. To be profitable in the long run, you need to familiarize yourself with the tools at your disposal. This means learning about various financial instruments, their benefits, and their shortcomings, as well as familiarizing yourself with multiple techniques and strategies applicable across a variety of market conditions.

2. Poor Risk Management

The first step is to accept that you can’t avoid losing money at some point, it’s just part of the game. Trading means working with probabilities and weighting risk vs reward. Successful traders never aim for unattainable 100% success rates, instead, they look to strike a good…