Forex has become very popular among investors because of its highest return on investment. Beginners all over the world come to visit this marketplace and fall in love with it at last. An investor must be careful to trade in this platform as a beginner. There are so many pitfalls that can be felt by an investor in the beginning. Today, we will discuss the common mistakes that must be avoided in the stock, Forex, and ETF trading business.
Trading with the low-end broker
Choosing a perfect broker may seem like a daunting task, but with proper care, this problem can be solved easily. One should check if a broker has the necessary documents from the regulatory authority or not before hiring him. If necessary documents can be found, we may take that broker helpful to execute our trades.
Beginners fail to choose the right broker as they are very careless to enquire enough about the brokerage house. They should call the support center and check whether they are providing the right answers cordially about their services or not. If everything seems alright, a trader may start working with him.
Trading with high leverage
It is a great tool that helps to execute the trades with little investment. A beginner must be careful when taking high leverage as it may increase the risk to a greater extent. Generally, a 1:10 leverage facility is provided, indicating that if the deposit is $10, one can get the facility of $100 of investment taking the leverage facility. Check it out here and learn about the optimum leverage provided by the elite brokers. Though some of them might provide 1:50 or higher leverage, investors must be careful about the risk factor.
The investor must remember that he is taking the leverage as a loan from the broker if he must have to return the loan to the brokerage house whether he makes a loss of profit. Newbies do not be careful about this and consequently fail to keep the trading account active. It is often found that the account gets closed because the account balance is zero.
Not using the paper trading account
A demo has all the facilities like the real one, but the main difference we find here that the investors do not have to take responsibility for profit or loss here. As the money which is used here is fake, the trades can be executed for the test purpose. Experts are very professionals to utilize the demo account to modify their action plans regarding the trades. Newbies are very reluctant to utilize a demo account. Thus they start executing trades on the real platform without any prior experience. This type of tendency must be avoided as a beginner to be successful in the market.
Not using stop loss
Setting up a stop-loss point helps an investor to save his trade from the sudden downtrend where he could lose a huge amount of money. A trader must set a stop loss point that can close the trade when the specific point will be touched in the downtrend.
Some investors do not care about a fixed stop loss point and continuously change the locations of it. Such type of activity may make the account balance zero soon, which may close a trading account and end the career of the trader. Professionals set a stop loss point, which helps them to save their time and money without being present all the time.
To the bottom line, it can be said that an investor must be careful about not making any mistake during the trading as it may cause a huge loss for him. Newbies must try to avoid all types of wrongdoings by studying the marketplace in the beginning. Without having proper planning, trading may seem exhausting for the newbies. Formulate a better plan and execute this wisely. Wrong execution can decline the success rate.