The full-time day traders are very skilled and they are very concerned about their actions. But still, the success rate of the day traders is pretty low in the investment business. Some novice traders often consider themselves full-time day traders even though they don’t have enough knowledge about this market. To become a full-time day trader, you need to learn a lot. Most importantly, you should be aware of the top five critical mistakes.
In this post, we will discuss the top five common mistakes of full-time day traders. If you intend to become a day trader, make sure you never make such a mistake.
Trading the index
As a day trader, you should not trade the index. Some day traders often trade US 30 and expect to make a big profit. But to trade the index, you need to have the long-term vision of the market. It is better to limit your trading with the major currency pairs. However, if you are extremely skilled and have a large investment, you may trade the index. But in that case, the risk factor should be less than 1% in each trade. And make sure you are not trading during the high-impact news release as the market becomes extremely volatile. Moreover, the spread also increases to a great extent which makes the overall trading process extremely hard.
Trading the tops and bottoms
Trading the tops and bottoms is a very big mistake in the Forex trading profession. You should never try to trade the reversal as a professional trader. Try to take the trades with the existing trend as it will make the overall trading process. Think like the top traders at Saxo. Try to develop a simple trend trading method so that you can reduce the risk factor in each trade. But if you are extremely skilled in analyzing the key news, you may trade the tops and bottoms. But make sure you use the price action confirmation signals.
Trading with a high leverage account
The leverage of the trading account greatly impacts your trading performance. If you intend to make regular profit in the retail trading industry, we strongly suggest trading with the low leverage account. If the leverage is too high, you will get more buying power. Thus you will keep on adding a position to the losing trades. This might lead to the problem of overtrading. And remember, a good broker will never insane leverage to trade the market. So, to ensure the safety of your trading capital, you should always trade with a low leverage trading account.
Relying on the EAs
The new traders are often too advanced. They think that the modern EAs can make them a millionaire within a short time. The EAs are not meant to trade the market rather they can be used as a simple trade filter tool. Most professional traders avoid using EAs as it reduces performance. Instead of using the EAs, you should learn the use of the indicators. And do not use too many indicators in your trading. If you do so, you will get confused and make many silly mistakes. Try to learn the manual method of trading and take the trades with strict discipline. If you get stuck with the use of modern tools, move back to the demo account and try to fix the problems.
Not following the trading routine
No one can become a successful trader without following the trading routine. To succeed as a trader, you need to follow fixed sets of rules and trade the market with extreme discipline. Try to write down the rules on a piece of paper so that you can make wise decisions at trading. If possible, maintain a trading journal as it will help you to measure the trading performance. Never trade the market without having fixed rules.