So you’ve decided to try your hand at CFD trading and have already set up a trading account. You read several online tutorials on using your chosen platform and even watched a few YouTube videos showing how easy it is to navigate. You should feel confident in using the platform and ready to make money. However, when you’re ready to place one of your first trades, you realize that there’s more to this than just clicking buttons; you also need knowledge about the market.
When people who are new to CFD trading attempt to make their first trade before having a deep understanding of the market in which they’re trading, they often make mistakes and might lose money in the process.
They don’t understand how CFD trading works
Understanding how CFD trading works is one of the most severe mistakes traders new to the market can make. If you don’t know how it works, you’re just trading blindly and are more likely to lose your money.
They trade on emotion
Since CFD traders have no physical possession of the assets they are buying or selling, many new traders expect the prices to go up because they want them to go up severely. Thus they allow their fear of missing out (FOMO) to take over their thinking process.
They think that there is only one way to trade
Newer traders often think that there is only one way to trade, especially when looking at tutorials online or watching YouTube videos. It limits them in their potential to make good trades.
They are too impatient
When new CFD traders are trying to make money as quickly as possible, they shouldn’t take risks because they are desperate for the money. If you do this, then you may lose everything you just earned.
They ignore business fundamentals
If you’re not paying attention to what’s going on with big businesses and how these things affect market prices, then it’s easy for you to become so caught up in trading that you start to lose focus on what matters.
They don’t understand how CFDs work
If you think that you can make money on a trade if the market price of an asset goes up but at the same time, don’t think that it will decrease your potential profits if the market moves in the opposite direction, then you are mistaken. If this happens, then you might end up losing more than you bargained for.
They believe everything they read
Just because someone is making claims about guaranteeing success with trading or having made millions online doesn’t mean that they have credibility or have even traded before themselves. You need to do your research and find out who is honest with you.
They don’t edit their trading plans
If your trading plan is not well written or organized, you are less likely to follow it. Meaning there’s more of a chance for you to make mistakes when placing trades.
They always need confirmation before they trade
Considering the market price moves in the direction they predicted, some new traders don’t do anything because they want confirmation first. If this happens, they might wait too long and miss out on great opportunities before finally deciding to act.
They fail to use stop losses
Not using stop losses is one of the most common mistakes beginners looking to become CFD traders. If you don’t have a stop-loss order in place, then there’s more of a chance for you to lose all the money that you’ve earned so far.
They follow momentum instead of positioning themselves wisely
When day trading, new traders often think that they should be trying to time their trades as close as possible to when something just happened or is about to happen. They miss out on other opportunities and don’t consider other factors, such as the complete picture of economic events.
They drown themselves with unreliable information
There are tons of resources online that claim to offer free tutorials on becoming a successful trader, but many of these resources aren’t helpful at all. You may use the information to place trades for yourself, which can be very dangerous.
Now that you know what mistakes to avoid, use this link to get started.