The way our minds work is a great mystery. But one thing is pretty clear. No one in this world thinks in the same way. Every person has a unique way of thinking and they respond in a different way to each problem. The same thing is very common among retail traders. Due to the variation in psychology, retail traders analyze the same market differently. One might find a long trade setup in the USDSGD pair and another might find a short trade setup at the same instance. So, it’s obvious that someone is going to lose money.
To become a good trader, getting yourself familiar with the psychological factor is very important. Let’s find some of the common psychological factors which cause rookie trades to lose money.
First of all, we need to talk about the dilution effect. In most cases, the amateurs in Signore get confused by extracting information from too many sources. But extracting information from too many sources doesn’t work. In other words, it creates a dilution effect. To solve this problem, you have to rely on the long term goals and trade the market with proper discipline. Instead of relying on other people’s opinions, you should focus on the core factor of the market. For instance, try to analyze the technical details and place your trade with managed risk. Stop thinking about the big winners and concentrate on finding high-quality trade setups.
Addicted to trading
Rookies often become addicted to trading and they try to earn big money. But securing big money in the trading business is not always possible. You have to earn a small amount of money. The priority of naïve traders should be the safety of their investment. Taking too much risk and getting addicted to this market is one of the key reasons for blowing up the account. To learn more about the trading process, you can also access the learning center of Saxo. Find more info about Saxo learning center and become a skilled trader. But never become addicted to this market as it will cost you huge loss in trading.
Avoid the trend
New traders tend to trade the reversal. They are always trying to make money by trading the top or the bottom of the asset. But to trade the top and bottom, you must have knowledge of chart pattern trading. Learning about the chart pattern trading strategy is a very complicated process. If you want to make a big profit from this market, you have to realize the importance of the trend trading method. Sticking to the major trend can reduce the number of losing trades. It will make you more confident about your trading approach.
Addition to winning more
The addiction to winning more always leads to overtrading. The moment a trader starts to overtrade it ruins the associated rules to trading. No one can find perfect signals while overtrading the market. You have to limit the number of trade you will execute per day by following the basic rules. Create a unique trading journal so that you don’t have to break the rules. Before you place a new trade, write down the details of the trade and you will be able to keep things on track.
Never lose hope
Losing hope is very common in trading. In most cases, a few losing orders make the rookies frustrated. They become desperate to recover the loss and try to earn a big profit without thinking about the quality of the signals. As a result of this, they end up losing too many trades. But those who have a strong mindset can adapt themselves to the losing trades. They wait patiently for the next quality trade setups.