When starting out trading, many people make a lot of mistakes that may cost them a lot of money. If you want to avoid some of these mistakes, this post can help you.

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1. Don't trade without a plan

This is one of the biggest mistakes that traders make. They start out trading without having any idea about what they want to do or how they are going to do it. They have no plan whatsoever, so they never know if what they are doing is going to be successful or not. If you don't have a plan and just start trading, you are asking for trouble.

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2. Always have an exit strategy

This is something that many traders overlook and then regret later on. They open a trade and when it moves in the direction they predicted (which happens quite often), instead of taking off some or all of their position, they just ride it to the end. And when the trade then moves against them, they get stopped out and lose even more money. If you don't have an exit plan, you are just asking for trouble.

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3. Never revenge trade

The truth is that many traders have huge losses due to revenge trades. They become angry with the market and then decide to trade against it. They will then either lose big or end up making money because they are trading against the trend, but they will lose more than they would have if they just moved on and left it alone. If you want to avoid this mistake, just don't trade when you are angry. If you want to get somewhere in the financial world, don't anger the market.

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4. Know your time frame

When you are a beginner, it can be tempting to trade stocks with high time frames so that you can see a lot of big moves. But this is not the best strategy since you will also see a lot of fluctuations which means there are also many false signals. These can be quite confusing and could lead to mistakes being made. Instead, start out by trading with smaller time frames and only after you feel comfortable, move on to bigger time frames. It is much less likely to make mistakes that way.

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5. Have a risk management plan

When you are about to open a trade, you should always know how much capital you are going to risk. Many beginners don't or won't take any kind of risk management when the trade. They will put in all of their capital at once and then regret it when the trade moves against them badly. When you have a risk management plan, you stay in control of your capital. If you don't have one, you are asking for trouble. You may come up with your own plan that works for you or maybe even change it as your starting point gets more secure and stable. The key thing here is to keep the process as clean and disciplined as possible! If you do this right from the first step, then there's less room for mistakes.

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These are the top 5 most common mistakes that beginners make when they start trading and I hope this post has helped you in some way. If this post has helped you in any way, please do share it with friends!

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Check out this article on the benefits of specialisation in trading

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- Adrian - GoldSignals

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