The most common investors errors

Is it easy to list the most common mistakes made by investors? The old Polish adage says that a man learns from mistakes ... as long as he is aware of them. An investor is also a human being, but is he aware of his mistakes when trading his funds on the currency market? What are the most common mistakes made by investors? Below is a list of the sins they commit.

Retraction of SL after conclusion of the transaction

Determining the stop loss size usually affects the selection of the size of the transaction volume, and this determines the scale of the risk taken for a given position expressed in cash. It happens that the investor concludes a transaction by selecting a lot and setting the SL so as not to lose, for example, the agreed 5%. The game is slowly evolving, meanwhile the trader has doubts and believes that SL is too close and prefers to move it away to reduce the likelihood of a cut. Indeed, the farther the SL is, the less chance it will be achieved ... By performing such a procedure, we will certainly lose more than the 5% agreed at the beginning. Is that okay? Well, isn't it said that capital and risk management is at least 50% of the market success?

If you set in a given place Stop Loss and you have chosen the volume for it, which means that you did it according to some of your assumptions. Don't increase the risk during the game! However, if you think you have made a mistake by placing it too close, this is a signal to think over your next move more carefully before opening a position.

Driving with emotions

What if he turns back soon? But why wait, I'm coming in! "," I hope he will turn back soon "," I would not want to lose again "," I prefer a small, certain profit now than wait until I get another SL "... Beginners sometimes fight with thousands of thoughts investors. They are tormented by various emotions over which they cannot control. They are afraid that they will lose, they are afraid that they will not earn. They hope they will not lose, they hope they will earn ... They doubt whether they are doing well ... There are a lot of options, all due to money, the will to be right or to be successful at all costs.

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Emotions will never turn off completely. You can only learn to control them and not give them too much talk. Cool calculation and decisive action is what an effective investor needs. If you know what to do, just do it - don't get emotional. And if you don't know what to do, it's best not to do anything until it changes.

Non-compliance with MM rules

Capital management (Money Management) - one of the most important things in trading. Everyone who has dealt with any financial market seriously knows perfectly well that risk control and skillful management can lead to success, even if the transaction itself is average.

If you do not have clear MM rules or simply do not stick to them, know that your account balance is at high risk in the long term. Matching the trading volume "by eye" or exceeding the set level of loss per trade can lead to greater profits than normal. Maybe ... But as a rule, it leads to quick bankruptcy. If you do not know how to correctly choose the lot size or calculate the risk, use the FX calculator for this purpose. There are a lot of solutions on the web. It requires a minimum of effort, and in the long term it will certainly have a positive effect on your account balance.

System malfunction or poor knowledge of the system

Since you are starting to invest, you have an action plan. An action plan in which you assume entering into transactions under specific market conditions. Finally, you need to know when to open the position, when to close it, and whether or not to secure it Stop Trailing. A clear (for you) and precise system is the basis on which you are based. It often turns out that after the transaction, the trader starts to think and thinks when to actually leave it here, or maybe when to choose the next one to earn even more. Quickly forget about clear input / output conditions compatible with the system or, what is even worse, it turns out that they were not understood at all and did not take into account many important aspects (e.g. decrease in variability, playing in sideways trend). Then instead of using the system in practice that was supposed to ensure your success, you start to blindfold and create its new variations hot.

If you decided to use it, it means that you previously checked its effectiveness in some way (e.g. on historical data or a demo account) - then why do you suddenly change its conditions? Think about it before you start changing anything, even if the system is temporarily having a bad time.

Cutting profits, keeping losses

One of the commandments of trading is "cut losses, let profits grow" - probably every novice investor applies this commandment in practice, but in the opposite way. This is because, as a rule, we are guided by hope and fear. Having a profitable trade, we are afraid that it will soon turn back towards the Stop Loss. On the other hand, when the loss increases all the time, we are guided by hope, thinking that in a moment and for sure the course will turn back, and we will avoid disappointment. Meanwhile, the correct approach should be completely different, but most of all, to get there, you need to suppress the harmful emotions that cause this havoc. When you see that something is not going as you expected - cut this loss or tighten SL and wait - this order is to help you with this difficult decision (another issue is to put it in the right place).

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In the case of increasing profit, traders usually itch their finger, which is just waiting for the green light from the brain to be able to click with the mouse on the "close position" button. Why rush it? If you are playing with TP wait until it is reached. If something disturbing happens in the market, you can protect some profit by moving the Stop Loss. There are many options, and the worst thing is to wait nervously with the mouse in your hand to close the position with any profit.

Making "unnecessary" transactions

A trader's itchy finger also accompanies another situation. When nothing happens on the market or our proven system suddenly does not generate any signals to enter the market, we start to worry - maybe something is wrong? Maybe the system has stopped working? And yet our pips are running out! Take it easy, forex has never escaped anyone. Playing hard to play is a hobby, not an investment. The problem is that in the long run, it can be an expensive hobby that generates very moderate pleasure (and even mentally debilitating).

My advice? Turn on demo account and click there yourself. When the finger stops itching, turn on the real account again and watch the signals coming from your system. Be patient. It is better to lose a transaction opportunity than money.

No discipline

Once upon a time, a documentary entitled "Million Dollar Traders", Where people of different age, sex, education and profession were offered to participate in the experiment. They all had one job - they got access to the stock exchange, an account to invest, and after basic training, they were to start trading. One conclusion was that those who were the most disciplined (including a retired soldier) did best. This shows how important is discipline and sticking to the assumptions when investing.

If you find yourself checking your positions irregularly, without focusing on the signals coming from the trading system, not sticking to the set assumptions or missing important moments in the market, it is a clear sign that you definitely need to work on discipline.