The basics of trading (applies especially when you are new ) is to - Only risk what you can lose without any regrets. Trading too big is based on fear and greed, the two biggest enemies of traders. On the other hand, trading too small makes you sloppy and more likely to abandon trading rules and risk management. It’s important that you strike a balance between the both.
Here are the trading mistakes that you can avoid:
Overtrading even after achieving your goal
A common problem among traders is to trade even after achieving the target for the day. In the greed of earning more, many traders have gone into losses due to overconfidence or due to a fluctuation in the market.
How Dhan helps: If you have to stay in markets or exit the markets fast - remember Dhan provides the best option both ways, manage your positions like never before or fast exit from markets - all positions, or simply book your profits or cut your losses, all in a single tap!
Not Using Stop Loss Feature:
Stop loss feature has been specifically designed for traders to minimise their losses. It gives power to traders to plan their strategy. Unnecessary and avoidable losses can be prevented by just setting your stop loss price.
Remember: On Dhan, and possibly only on Dhan - you can manage your positions in detail, including adding Stop Loss to every trade you take. We really encourage our users to do that.
Trading without a plan or strategy:
Have clarity on what you want to achieve out of your trading. Set goals and let it dictate how you are going to trade.
Plan your strategies in advance, on Dhan - we have made your aftermarket experience in-line, so you can place your orders anytime before the market opens and simply adjust your positions accordingly.
Not measuring risk reward ratio:
Traders at times underestimate the importance of their trade’s risk reward ratio. There is no magic number. For new trading enthusiasts, using a low risk reward ratio could help reduce potential downside.
Trying to make profit in every trade :
Sometimes, it’s not about making profits from a trade but instead covering your losses. Many traders fall into the trap of going overboard and taking unmanageable trade risks resulting in huge losses. It’s wise to focus on covering the losses first and then concentrate on making profits out of a trade.
All of the aspects above can be controlled by discipline. Discipline will help you to remain invested during whipsawing markets and unforeseen events. A disciplined trader has a plan, a trading strategy and a trading checklist. The checklist helps remember the small things that may not come easily to mind during the heat of the moment. The right way is to do all the preparation in advance so during the market hours, it’s about execution, not decisions.
Signing off with - Trading is more to do with self-behavior, and less actually with your trades. Maintain your cool, have a plan and Happy Trading!
What trading mistakes have you made ? Do let us know in the comments