Finance

5 simple reason to lose money at trading

People are always talking about the fancy stuff in trading. In fact, when we read something very simple, we assume it will never add value to our life. But in trading, things are completely different. The simple approach is the best way to ensure big profitable trades. Taking data from different time frames and analyzing the variables with too many indicators is not going to work. You have to be a brave trader and follow the simple concept of trading. Let’s find out about 5 simple reasons why people are losing money in trading.

Ignoring the trend

Everyone knows trend trading is the best way to earn money. Very few people actually place importance on the trend trading method. If you dig deep, you will realize the key reason why people lose trades is they trade the extreme point of a trend. By doing so, they are just betting against the market. We all know the house always wins.

Using multiple indicators

The use of multiple indicators often leads to confusion. The traders often forget how to take a reading from the raw price chart. Indicators are your filters. If you take your trade based on indicator reading, the chart is not going to be in use. The professional traders always rely on the charts because the candles and bars tell you a lot about the market. You have to know the proper way to read the chart. Only then will you be able to make some serious profit from this market.

Not having a great broker

You might have a good broker that’s not great. The successful Singaporean traders always trade with a great broker. To learn about the great broker like Saxo click here. The reason why you need to choose a premium broker is because of the quality of the trading tools. You can’t analyze the market dynamics without doing the hard work properly. The majority of the traders fail to make a profit since they don’t know how to filter out the best brokers in the market.

A great broker will always care about their clients. They must have transparent pricing and premium website. Most importantly, they will have multiple regulations. Before you open the trading account consider this fact. If you feel satisfied with these things, you can talk with their customer support team to get the vibe about how they treat their client. If things go according to plan, open your trading account.

Using high leverage

Leverage is blessings in the retail trading industry. Unfortunately, it has become the curse for the rookies. The rookies don’t have the skills to use the leverage in an effective manner. They take the trades with big volume and they never think about the worst-case scenario. As a result of this, they lose money most of the time. A few losing trades can create more than 50% drawdown of the capital. After losing so much money it is very hard to stay calm and wait for a good trade. Usually, it forces the traders to trade with aggression and with insane volume. We all know what will happen to such aggressive traders.

Not having the confidence

Everyone thinks skills are the most important thing in trading. But to the professionals, confidence is the ultimate key to success. You might lose 10 trades in a row but you should not lose confidence. Losing confidence is more like admitting that you are not good at trading. But if you embrace the losses and dig deep to find the faults, you will learn new things about this market. This will help you to build your career. Never take decisions with emotional bias as it forces you to trade against the trend. Take a break when you feel that your mental stability is compromised. It’s better to spend some quiet time rather than to trade with a hot temper.

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