Number 1.
One big mistake I made when I was new to trading was following someone who didn’t trade based on real data. I was eager to learn about trading. So, I read many articles, watched videos, and looked for resources to understand it better. This was during my early days when I had only between zero to a hundred hours of trading experience.
During this time, I came across someone who had a trading strategy that seemed good. I spent roughly three to five hundred hours on it. Even though I understood the strategy well, I couldn’t make consistent profits. Now, I know that just a few hundred hours aren’t enough to master trading. True expertise takes much longer.
But, the real problem wasn’t my limited experience in the learning stage. When I tested the strategy, the data showed that, while it might win often, it would not be profitable in the long run. Here’s why: the strategy had between 50 and 55% win rate. However, the recommended reward-risk ratio was around 0.7 to 1, meaning the reward was 0.7 percent of the account and the risk was 1 percent. And no, increasing the reward risk ratio was not an option. Over time, this doesn’t result in profit. Even if you break even for a while, eventually you’ll see that the numbers just don’t add up.
The place where I learned the strategy did not provide any data. This taught me that many people follow strategies without any reliable data. They just hope it’ll work. That single insight made me realize my mistake. From then on, I only used strategies supported by data. If I hadn’t done my own testing, I might have kept using that faulty strategy for many months, wasting both time and money.
So, if you’re a new trader aiming for long-term success, avoid sources that offer strategies without proper data. Data can be anything that proves the strategy’s effectiveness. If you come across a strategy and there’s no supporting data, test it yourself. This might be the most valuable step you take as a new trader.
Number 2:
If I had started trading using higher time frames, like 4 hours or one day, I might have given up on trading pretty fast. You see, back then, long-term trading just wasn’t for me. In trading, there are mainly two types of people: some have a lot of patience and can wait for the right moment to trade, while others, like beginner me, prefer to jump in and out of trades quickly. Beginner me enjoyed the excitement of quick trades and the immediate feedback.
This kept me interested in trading and helped me stick around long enough to learn and improve. On the other hand, if someone prefers taking their time, analyzing deeply, and making careful decisions, then trading on longer time frames is their best bet. For them, short-term trading might be a mistake. It could stress them out and eventually make them want to stop trading. Remember, in trading, your mindset and psychology play a huge role, perhaps even more than half the battle.
Number 3:
Before I started trading with real money, I practiced on a demo account. These demo accounts often have a lot of money in them, like a hundred thousand or even a million. I think they set it up this way to make you believe you can earn a lot quickly, like a get rich quick scheme, which trading is definitely not it. Here’s the mistake I made: My demo account started with a hundred thousand, and even though I didn’t know about the martingale strategy, I accidentally started using it. When a trade didn’t go my way, I’d buy more, and then more again. Because the demo account had so much money, I could keep buying until my average cost was much lower. Then, when prices rose, I’d make a large profit. It felt like I was winning every time because of the big balance in the demo account.
This made me overly confident. I started to believe trading was easy. But when I used real money, I quickly began losing because I started the real account with smaller size than the demo one. The problem wasn’t just that I unknowingly used the martingale method; it was that I practiced with an unrealistically large balance. This difference in account size affected my mindset when I switched to real trading.
To fix this, I started adjusting the demo account to match the amount I’d actually be using. Many demo accounts won’t let you set a smaller balance, so I would intentionally lose a big trade. This would reduced the demo balance to what my real one would be. This practice was a game-changer. Everything, from calculating position sizes to experiencing losses, felt more realistic. By the time I switched to a real account, I was better prepared, and the transition was smoother.
Number 4:
Remember when I mentioned following someone who didn’t use data? Well, I also signed up with the same broker they use. Turns out, that was a mistake. Not all brokers operate everywhere; some face government restrictions, while others might have different limits. After I registered with this broker, I saw they claimed to have millions of users globally and even listed top user countries. However, I later found out that the broker was restricted in many of those countries because of government rules.
I was fortunate; I hadn’t invested much time and money with this broker, especially since it was international and I wasn’t fully trusting them. I deposited a small amount of money, and even managed to withdraw it without issues. But I’ve heard stories about others not being so lucky. Some brokers, if they’re not officially approved in certain countries, can accept your deposits. But when you try to take out your profits, there’s a problem. Since the broker is restricted, your bank can block the transaction. So the money just sits in the broker’s account, and you can’t get it out.
For beginner traders, one of the most critical mistakes to avoid is signing up with a broker not authorized in your country.
Number 5:
You know how some traders who focus on market fundamentals say that technical strategies don’t always work? Yet, there are traders who strictly use technical approaches and make more profit than those focused on fundamentals. This difference is because not every strategy fits everyone. Remember when I mentioned that over 50%, of trading success is tied to your trading psychology? If your mental approach to trading doesn’t align with your strategy, it won’t matter how successful that strategy is for others. There’s a good chance you’ll struggle with it.
One of the biggest pitfalls for new traders is using a strategy just because it works for someone else. Just because it’s effective for one person doesn’t guarantee the same results for you. Some strategies need a lot of emotional control, especially if they involve frequent trades in smaller time frames. Others demand a lot of patience, waiting for those perfect trading moments that don’t come around often but have a high success rate. So, patience is key in those cases.
Number 6:
I remember when I was just starting out, with only about 0 to 100 hours of live trading experience. Taking real-time trades, especially on short time frames like one minute, really made my heart race. At times, I’d even leave my house for a walk just to avoid watching my trades move into losses, which gave me anxiety. This nervousness messed with my trading mindset, leading me to sometimes make bad decisions and close positions too soon.
Here’s the thing: If you’ve carefully decided your moves before trading, there’s no need to constantly monitor it, unless you’re adjusting something like your stop loss. If you’ve set a fixed stop loss and profit target, constantly watching can make you close the trade early. And I don’t mean closing trades early because of new, relevant information. I mean making decisions out of sheer fear. I many times close a trade early if new data suggests the market is shifting. Like around the lockdown period, I had a long trade on the index. However, with sudden negative news from the UK, the market began to decline. Using this new data, I reduced my risk.
Remember, many trades might get close to the stop loss before turning around and moving towards the profit target. So there’s no reason to impulsively exit or stress over every chart movement. If you know your strategy works according to data, stick with its rules. Making changes out of fear can mess up the very edge that strategy provides.
Number 7:
Talking about fear, I remember those early days. With just 100 to 300 hours of trading experience, every loss would weigh heavily on me. After a few consecutive losing trades, I’d start doubting myself, thinking I was losing too much money or my strategy wasn’t right. But this mindset was a mistake. Thankfully, I was recording my trades. When I’d check my profit graph, it generally trended upward. Any recent loss was just a small to medium dip in that upward trend. This showed me that my overall strategy was still solid and I was on the right track.
You see, any successful trading strategy will have its share of losses. Your profit graph won’t always shoot up; it might have dips or even plateau for a while. This simple graph was a huge help in keeping my mindset positive. So, for beginners, it would be a real mistake not to track trades or at least maintain a profit graph, even if it’s just on an excel sheet.
Number 8:
When I first began trading, I came across a thought in a book – the worst thing for a newbie trader is making big money fast during their early learning days. After years of trading and racking up 10,000 hours, I completely see the wisdom in that statement. Everyone learns differently, but for me, it took roughly 1,000 hours of actual trading to grasp the essentials that helped me break even or do slightly better.
So, imagine someone fresh to trading, with less than 1,000 hours of live trading experience, suddenly making a lot of money. Chances are, they just got lucky. If they then believe they’ve mastered trading and invest a hefty amount expecting consistent profits, that would probably be a mistake. and they’re likely setting themselves up for disappointment. Based on my journey, gaining consistent trading success takes much more than those initial 1,000 hours.
Number 9.
Imagine a guy named Bill who likes trading breakouts in a range market. Bill’s plan? Buy when the price shoots above the range resistance. After winning a good number of trades, Bill is happy. But then, the next ten trades end up with losses. The price quickly drops back into the range after the breakout, resulting in a false breakout.
Bill knows that his strategy succeeds around 60% of the time, and with a 1 to 1 reward-risk ratio, that’s impressive. However, he feels that if he could identify and avoid these false breakouts, his win rate could improve. So, Bill uses the RSI indicator, hoping it’ll help confirm genuine breakouts. Still, even with this added confirmation layer, he continues to experience losses, maintaining a 60% win rate.
Thinking more indicators might be the solution, Bill brings in the stochastic indicator, and now he’s looking for three confirmations before making a move. Yet, this just means he’s now missing out on many breakout opportunities that had a good 60% success rate. To counter this, he adds a moving average. Now, with four confirmations required, his trade opportunities go down further. Despite all these indicators, his win rate remains 60%, but he’s trading far less frequently.
Bill’s mistake is a common one among beginners: over-optimization. Most trading strategies, especially those reliant on indicators, only offer a slight edge over breaking even. Because Bill keeps trying to perfect his strategy by adding more layers of confirmation, he’s missing out on decent trade opportunities. If he’d stuck to his original, proven breakout method, he would have had more profits.
Avoid over-optimization and stuffing your charts with countless indicators. Most trading strategies won’t have a sky-high win rate, and piling on more indicators won’t significantly boost that rate. Instead, focus on consistent, proven methods and keep trading relatively simple. That approach is more likely to bring in profits than a chart that looks like this.
Number 10:
Many years ago, I either read in a book or heard someone mention that our minds are naturally better at spotting flaws and disadvantages than at recognizing solutions or advantages. In simpler words, we’re often quicker to see why something might fail than why it might succeed.
When I was a beginner trader, what really helped me was this: every time I identified a potential trade setup, I would first note down all its positive points, like if it was near a support level. But then, I would also list the reasons why it might not work out, the factors pointing toward a loss. Many times, the list of disadvantages would be higher than the advantages. If that was the case, I’d skip that trade setup. This approach saved me from many false or weak trades that could’ve cost me money.
If you are supporting Trading Rush on Patreon, you might’ve seen that when I review your setups, I often break them down into advantages and disadvantages. Even after 10,000 hours of trading experience, this habit remains with me. It’s just the clearest way to decide if a trade is worth taking, A way to see if the trade truly has an edge.
Only surrounding yourself with opinions and analyses that confirm your own beliefs can lead to a narrow perspective, which is not really good. Avoiding Opposite Views can be a mistake! It is better to Find reasons why your trades won’t work before taking them!
