For many beginners the allure of online trading is the potential to be your own boss, trading when you decide, making huge profits and retiring to your own island in the tropics sipping Pina Coladas on your 100-foot yacht……. OK now WAKE UP!!!!!
As we have discussed in previous articles it takes commitment, focus, patience and a degree of trial and error to hone your skills and become a more profitable trader. None of these attributes happen overnight – they all take time!
One of the biggest mistakes beginners make is opening a trading account with the initial deposit you cannot afford to lose and with the highest possible leverage available. Do this and, sadly, you are doomed.
Be sensible and “invest” with an initial amount that is not going to mean the end of the world to you if you lose it. Trading online will offer you great opportunities but there is a cost: Time and Experience, which will result in you taking losses. A non-toxic initial deposit will help you better manage your risk. It is more gratifying trading with larger equity derived from successful trading (your profits). Invariably new traders deposit a toxic amount which gradually declines and they then “add” more funds to trade. In short: increase the size of your trading account through organic gains and not by greater deposits.
But remember! If you do not care for wins or loses as they seem indifferent to you, deposit more!
The loss is supposed to hurt and the winning trade are meant to bring this nice warm feeling deep inside of the game well played!
We all know leverage can magnify profits – but remember the converse is true. I.e. your losses are also magnified. Another big mistake beginner make is to open an account with high leverage. Look online and you will find Brokers offering more than 1,000 to one leverage! Such high leverage will allow you to open much larger trade sizes which will exaggerate (enlarge) your Profits & Losses. And let’s be honest you will definitely have more losses than profits when you start. Learning curve applies to trading even more than to any other skills and crafts. In addition, how your broker handles stop outs – I guarantee you will be surprised as each broker operates differently so beware and research, research, research!
The point is; start off with leverage and an account size that will help you hone your trading, risk management (risk reward) and trading plan skills without the stress and pain that your fresh trading brain of the rookie cannot handle… yet.
#tradesafely #doublehit #fxzoo