Professional traders are well aware of the fact that they have to lose money on regular basis. They never expect that they will win all the trades since it is an impossible factor. To survive as a professional commodity trader, you have to follow some strategic steps. Some of you might think that these steps can be developed randomly but this is not all true. You have to follow some rules and learn the important details of this market. Even after doing all the hard work, you will still make some mistakes.
So, is there any way we can trade without making any mistakes? Well, being human, you will often make some mistakes. But if you learn about the most common types of mistakes made in the trading business, you are not going to have any major problems in your trading career. Let’s explore the most common errors in the commodity trading business.
Not using stop loss
One of the most common reasons for which rookies are losing money is not using the stop loss. Most of the time, novice traders trade without any protective stops in place and thus they lose a big portion of the capital when the trade goes wrong. Conversely, professional traders are always taking trades with managed risk and they are never trading without having any protective stops. They know very well that the mental stop doesn’t work in the investment business. If you want to keep your fund safe, you should learn to use the stop loss from the ground up.
Not following the trend
Ignoring the importance of existing trends is a very big mistake. You should never take the trades against the major trend as the market tends to favor the trend traders. For more explanation, you should visit the official website of Saxo. If you carefully observe the consolidated price movement in the trading instrument, you will notice that most of the time the price is breaking in direction of the breakout. So, if you trade against the major trend, you are most likely to lose money most of the time.
Not learning fundamental analysis
Very few traders in the commodity trading industry give importance to fundamental analysis. But if you do the math regularly, you will realize fundamental analysis is one of the key things you need to follow as a trader. If you rely only on the technical factors of the market, you are not going to get an overall picture of the market. Learning about fundamental analysis is a tough task and it takes time. You might have to take help from the senior traders. If you take help from the senior traders, there is nothing wrong with it. But do not forget to follow your trading plan as it will act as your safety barrier at trading business.
Trading with emotions
Emotional trading can be very dangerous for retail traders. If you look at the professional traders in our society, you will never find them trading with emotions. They are always taking the trades in a very strategic manner. Though they often become emotional, they quickly gain control over their emotions. When you will trade the market based on emotions, you will be taking the trades without doing the proper data analysis. Failing to rely on technical data increases the risk to a great extent and causes you to lose money most of the time.
Using a low-end broker
The selection of the broker is very important to your trading success. If you intend to succeed as a retail trader, you should choose a good broker. Failing to find a reliable broker like Saxo can lead to big losses. At times, you might think you know everything about this market and you won’t have to use the high-end platforms. But this is very wrong. So, always choose a well-regulated broker to trade the CFD market.
