Warren Buffett, the mentor every trader looks up to once said, “Rule No. 1- never lose money. Rule No. 2- never forget Rule No. 1.”
Unfortunately, many in the online trading business fail and lose money. Why? Mostly because they aren’t trading right. Trading is not for the faint of heart. It’s certainly not your cup of tea if you are impatient.
The wrong attitude, no prior research, these and many other mishandlings lead to failure. Don’t want to wind up in the list of those who fail? Then make sure you avoid these:
1: Looking for Instant Returns
Never be on the lookout for a holy grail. It’s a straight path to failure. If you like instant results, trading isn’t for you. Such individuals perhaps would enjoy the Cox online bill pay service for instant bill payment more than online trading.
It will entice you to jump from one trick to another, one platform to another in search of a magic solution that brings a fortune. Such individuals don’t follow a systematic path and hence end up disappointed.
2: Trading Without a Plan
No business has ever established without a business plan. Then how can a successful online trading business be established without one? Markets are fast, complicated, and unpredictable. Without a plan, you are doomed.
A trading plan is unique to your goals, the assets you want to trade in, and your trading bets. This concrete plan makes you adaptable to the sudden market changes.
3: Poor Risk to Reward Ratio
This happens because of two common reasons. First, the trader didn’t have a plan and kept on reacting to the market. Second, they are impatient at holding their winners. With a trading plan, you gain confidence. It lets you see your analysis till the very end.
So your first trade of the day went well and it really amped up your confidence. You decide to go for another one and another one and so on. Continue you trading with this attitude and you are going to lose.
Experts say if you are trading for the sake of it, you are overtrading. It’s not your 9 am to 5 pm job where you have to be productive all day long. Trade only when there’s a genuine opportunity out there.
Only those succeed at online trading who act like winners. And winners are patient. They wait for setups. They aren’t triggered by every market movement.
5: Keeping Your Eyes on Money Instead Of Trading
A trader who is focused on rewards, profits and money loses sight of what takes to achieve these gains.
When professional basket players are in the field, do you think they worry about the profits or the game? They are focused on their passion – the game! That’s what you need to do as well. Focus on the mechanics and the process. The money will come rolling on its own.
6: Poor Money Management
Many traders fail before they even get the chance to enter the playfield. This happens because of poor money management and greed. Don’t invest a particular amount if you can’t lose it. Betting all your money is never the right approach. Similarly, risking too much money per trade isn’t recommended.
Always calculate how much you can financially and mentally afford to lose per trade. If you are not ok with the loss, never proceed.
7: Trading Without a Routine
Trading without a routine leads to chaos. The way a trader conducts themselves carries over to the trading results. If you don’t follow a consistent approach, you won’t get consistent results.
A trading routine is very similar to a morning routine that prepares you for your workday. In online trading, you can’t wing it and figure everything out alone. You can’t trust your gut. You must have a real trading strategy mastered by analyzing historical data to become profitable.
Like Warren Buffett says, never invest in a company if you don’t fully understand the way it operates.
8: Looking for Shortcuts
There are no shortcuts in trading. Reading a few books on trading isn’t going to make you a successful player. Those shortcuts are a fraud. To learn the ropes, a trader must put time and attention. Chances are you might even need experienced traders to help you.
9: Not Having a Mentor
Every successful trader has a mentor. They are like a basketball coach who helps you understand your strengths and weakness and teach you from experience.
A trading mentor lays out strategies and devises a trading plan. A good mentor will be your guide. When you get stuck in difficult scenarios, they will show you the way out.
10: Being Undisciplined
Regardless of where you believe the trading market is headed, stick to the rules. For some, it’s a struggle to skip the tempting trades. Such an undisciplined attitude often results in losses.
Don’t want to fail in online trading? Make sure you avoid these pitfalls. Some offers can be tempting but you may be better off without them at the moment. This reminds of my decision to upgrade my Internet to plan. The agent from the customer service department was recommending be Cox Gigablast plan. I didn’t take the offer because the speed was exceeding my needs. Instead, I went for another one of Cox’s speed tiers and I have no regrets!
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