Are you a newbie in the stock and commodities trading game?
Whether you’ve yet to take off with your first investment or you’ve already made a couple of trades so far, there’s still a lot you need to learn about the market and the secrets of trading successfully.
Today, we will reveal the 10 most common trading mistakes beginners make and also tell you how to get by them without risking your money.
1. Not Choosing the Trading Platform Wisely
A trading platform can make transactions much quicker than traditional trading ways. These automated systems can allow you to make comparisons, keep a watch on trending commodities, and make a quick call when required.
When a new investor treads the waters of commodity trading, he is met with several apps and software programs that claim to be the best and the most reliable ones.
Some investors go for just any app without checking the rating or reviews.
That’s a bad call!
Always choose from among the best commodity trading platforms which have been scrutinized through a stringent testing process.
Also, check if the platform you’re choosing is appropriate for the kind of transactions you want to make. Some apps specially cater to day trading, soft commodities trading, etc.
2. Investing Without Researching
New investors are often excited to start trading, especially if they’re in it just for gaining some experience. Unfortunately, the lack of seriousness can not only cost them their money but also kill their spirit to continue trading in the future.
On the other hand, investors who research before they put their money on the market, start slow but steady. They make fewer mistakes and errors of judgment.
It’s better to first track the commodities you wish to invest in, and understand how the market behaves before diving into commodities trading.
3. Investing Without a Plan
Trading without having a plan of how much you’re going to invest in a month or a year, and how much profit you expect to make, is another mistake that rookie investors usually make.
Experts recommend that you should always have a plan as well as a Plan B ready.
You also need to learn to assess the efficacy of your plan. Sometimes, it’s just a bad day for the market and not a bad plan that runs you into losses.
4. Falling Prey to Mob Mentality
A new investor who has little confidence in his market research skills looks around for tips and tries to follow trends. This strategy often backfires.
The reason for buying and selling is different for every investor. And so is their risk appetite. Besides, there’s a lot of unreliable advice floating around to trap new investors.
Shop around for advice as much as you like, but take your decisions wisely. Don’t blindly follow what others are doing or saying.
5. Making Big Investments at the Wrong Time
Once people start making profits on the commodity market, the lure of getting richer quickly can prompt people to take bigger risks.
While there’s no way to be certain about the prospects of making or losing money in commodity markets, making hasty decisions and risking big investments is never a good idea.
If your timing isn’t perfect, you could lose all your money!
6. Not Keeping a Record of Your Trading Activity
Many investors don’t realize the importance of being organized and managing their trading activity in a planned manner. Unfortunately, these investors hardly ever make sound decisions and may even end up losing money.
Keep a record of your transactions with basic details like the date of the transactions, the commodities you’re buying and selling, and brief notes on why you’re taking such calls. This information will come in handy for developing insights into the market trends and help you become confident in your trading style.
7. Being Guided by Emotions Rather Than Logic
So yes, essentially every human being is a sensitive creature. Happiness, anxiety, excitement, fear and other emotions determine most of our actions and reactions.
But prudence should trump emotions if you wish to become successful in life, especially if you want to succeed in commodity trading. Emotion can cloud your judgment and make you overlook minute details.
So learn to trade with detachment, and let your reasoning guide your decisions.
8. Not Learning From Your Losses
Losing some money in the commodity market is inevitable. A few setbacks lay down the foundation of your learning and help you mature as an investor.
But not learning from your mistakes and becoming comfortable with booking losses can cost you heavily in the long run. Small losses can aggregate into a large sum and before you know you would have lost a significant amount.
9. Trusting Your Intuition Too Much
Some people enter the commodities market relying on their intuition. They trust their intuitive decision-making to predict market trends and stock performance.
Intuition is a tricky thing. You can live the high of a winning streak, thinking it’s intuition guiding your success. Only to come down crashing with a loss later, realizing you’ve been living an illusion.
10. Not Having an Exit Strategy
Before you enter any trade, you’ve got to have a clear idea of when and how you plan to exit. Never make the mistake of coming up with the exit strategy at the last minute because then you’re bound to get confused or careless.
Be clear about the triggers that prompt your exit from the beginning. You can’t be of two minds when it’s time to make a call. For example, if you’ve achieved the profits you had aimed for, don’t hang around in the market expecting to make more money. The profit target is your trigger, so you must exit.
This discipline is a must-have if you want to devise winning strategies and become a successful trader.
Remember when you start trading you have equal chances of profit and loss. But your ultimate success or failure depends on what you learn and how you use your experience over time.
We hope you’ll get a better perspective on commodities trading with the insights and tips we’ve shared here.
Just take it slow. Soon you’ll be a pro!