How to Blow Your Account | Step-By-Step Guide 💰 to 🪙
In this article, we will discuss the set of actions, habits and beliefs that will blow your account.
1. Trades are based on emotional decisions
Behind each trading position must be a reason.
The entry reason of a professional trader is based on a very strict and objective conditions, while an unprofitable trader follows emotions and intuition.
2. Stop loss placement is for losers
A lot of traders consistently neglect placing a stop loss. Remember, just one single trade without that may blow your entire account.
3. Set unrealistic goals
There is a common misconception concerning trading: that the equity size is not proportional to potential gains. Such a reasoning leads to various false conclusions.
One who is trading with 100$ account and expecting to buy lambo, will inevitably blow the account.
4. No time for trade journaling
Why to even bother yourself with trade journaling?! It is just waste of time.
Remember, that trading journal is one of that best tools for learning. Constantly assessing your past decisions, you identify the flaws of your strategy and fix that, increasing your future gains.
5. Trading plan is for fools
I know a lot of traders who trade without a plan.
Remember, that the trading plan is your roadmap. Without that, it is impossible to become a consistently profitable trader.
6. Blindly following other's view
While you are learning how to trade, your task is to learn the reasoning behind the trades of the pro's in the industry. Following them without reflections, you are not learning and, moreover, you are becoming dependent. Losing, you put the responsibility on their shoulders instead of yours.
Such an approach will lead you to failure.
Learn to become responsible in your trading decisions and execute your own analysis before you follow any other trader.
7. Who needs economic data
As we discussed many times, fundamentals are the driver of the market. Neglecting the trends and global situation, not studying the news, you will unavoidably be fooled by the market.
8. Indicators are the magic pill
I know a lot of traders, who spend thousands of dollars looking for a magic indicator - the instrument that will make tons of money.
The fact is that indicators are just a tool in your toolbox. Its goal is to provide some minor additional clues to your analysis.
Overestimating the importance of indicators, you will most likely blow your account.
9. Not investing in education
Many traders are spending their money not on education but on fancy tools, signal services, robots and indicators.
However, the fact is that only knowledge gives freedom, only skills can make you independent.
10. Back testing is pointless
Trying different strategies, many traders intentionally skip the back testing part.
Remember, that back testing is the most proven way to verify the efficiency of a strategy, allowing you to save time and money simultaneously.
11. Paper trading does not make any sense
Same thing with paper trading. For some reason, the majority of the traders skip demo trading, quickly opening a real account.
However, the fact is that demo trading is the best, risk-free tool for learning how the market works.
Unfortunately, these 11 fallacies and misconceptions are very common. Analyze your trading and make sure that you are not making these classic mistakes.
What would you add in that list?