Greetings all Deriv Community members,
Did you know common trading mistakes aren’t specific to beginners? Even seasoned traders make mistakes. The solution to avoiding them lies in developing a structured and disciplined approach to trading, and we would like to share how to do it in 4 steps.
Step 1 – Planning what trades to start and when
Prepare a trading plan that includes analyzing current global and economic events and doing your research on how markets are responding to them. If you have limited time for research and analysis, use lesser capital to trade 1 or a maximum of 2 markets simultaneously. This trading plan will help you analyze trading opportunities practically and objectively.
Step 2 – Planning what trades to end and when
A fundamental and technical exit strategy plan will help you avoid mistakes like emotional and impulsive trading or not cutting a losing trade. Key indicators like resistance and support lines are a fact-based way to understand market sentiment. Information on resistance and support lines can also highlight the range of an asset’s price movement.
When placing trades, use this information to identify the prices at which you will close the trades – either to secure your potential profit or to limit losses if the market reverses. But more importantly, avoid changing your plan so you can handle any trade objectively if it doesn’t go as planned.
Step 3 – Use risk-management features
Trading is a high-risk activity, and the best way to deal with a high-risk situation is to have a safety net even if you’re fully geared up. That safety net is using risk-management features to secure your potential gains and control your losses when the market moves against you.
Step 4 – Journal to learn about financial market trends and your trading style
Use a journal to document the events of your trading day. Note down which trades were profitable and which weren’t. Add notes against each of them, mentioning what data you based your prediction on and any insights or past learnings that impacted your decision-making process.
The above 4 steps can help beginner and seasoned traders refine their trading skills through constant learning, practice, and discipline.
However, if you are unsure which market to trade, how to use risk-management features, or want to test a trading strategy, practice risk-free with a demo account, which is preloaded with virtual funds. Sign up today so you can try out these steps.
Also, you may want to check out this article for our e-book to enhance your trading knowledge:
Hope the above information is useful for everyone.
If you have any further queries, please do not hesitate to contact our Live Chat support for assistance.