I’m a man of stats, but that statistic is forever in the favour of the platform providers. If you’re a new retail trader, or someone looking to get started and you saw that statistic, you have to be in the top 10% of retail traders to make any money at all – why on Earth would you start?
Simple answer, you more than likely saw an advert or someone saying how much money can be made trading.
This is true, how do you think the rich get richer? Work on their salaries of £100k+++? No, they invest in the markets, properties, other assets to make their hard earned money work even harder. To get wealthy you need the money you earned to be making more money for you whilst you’re sleeping / out earning more money.
Get the concept, for every £1 you earn – you want that £1 to make you £2, £3, £4 etc.
Unfortunately, a lot of adverts out there show how easy trading online can be and how it can be done at home earning you millions over night. They’re all wrong! The only way in life you can literally be a millionaire over night is by inheriting it, every other method is through solid hard work.
As you should be skeptical about all kinds of offers and adverts about trading, can a program / robot / algorithm really make you money on autopilot?? No.
Think High Frequency Traders just develop their algorithms and sit back and watch money pile in on autopilot?! Don’t make me laugh. They are ALWAYS coding and adapting their algorithms to compensate for the markets volatility and behaviour. These HFT programmers / Traders are paid literally hundreds of thousands to ensure the algo works correctly. But it’s okay because FOREAUTOWIN ROBOT MASTER who guarantees your 99.99% win rate and millions of pounds, that you download and install on your computer for only £100 is going to be just as good. (This is not a name of a robot at all, nor am I endorsing any robot with a similar name – this is just a dramatic example of how stupid they are)
Dont get suckered into advertising.
If you really want a chance to trade the markets, you’re going to have to understand the mistakes the 90% of traders make daily. Here are the top 5 Mistakes:
Cutting Your Losses, Letting Your Winners Ride – simple really, too many retail traders are more than happy to let a losing position run -£500 but jump at the chance to take £20 profit?! INSANE! If you’re doing this right now, you will not be successful.
Chasing your losses – Had a bad day trading? Go trade some more and see what happens – that’s what the voice inside your head will be ushering. If you listen to this voice, your destined to fail. Limit your losses with appropriate risk reward and have a Target Profit and Target Loss for the day. If you say for example you want to make £200 in the day but only lose £100 for the day – AS SOON AS YOU HAVE EITHER MADE £200 or £100 HAS BEEN LOST – QUIT FOR THE DAY. This is an example.
Trading other Assets because X Y Z has been successful in it. It’s great, your friend / colleague / family member / dog has been getting great results on the FTSE MIB (Italian Index), you decide to go and trade it because they can do it so easily but you get slaughtered? Why? Because you are trying to trade something you don’t know! Stick to a handful of asset classes: S&P500, EUR/USD, Bluechip Stocks, T-Notes for e.g. Don’t mix and match asset classes because someone else trades it.
Listening To Other People – this is an ironic statement on my behalf – but stay with me, you need to do your own research into the investments you choose. If you follow a signal provider, that’s great I hope they do well for you, but you still have to understand what the market is your trading.
Know Your Dealing Size – Make sure you’re not risking too much of your account. We practise 1% risk vs 2% reward. That way we’d need to lose 100 trades in a row to blow up an account. Simple Risk:Reward mechanics like this HAVE to be implemented. If you have £1000 in an account and you risk £10 a point, your margin would be £600 which is 60% of your entire account. Furthermore, You would stand to lose 10% of your account to gain 20%. This works, but if you lost 10 trades in a row – you would lose your entire account.
These are what I would understand as being the top 5 mistakes traders make when they start trading online. If you’re using the platform for the first time, spend 1-2 weeks on a demo account – understand the platform and make sure all mistakes are ironed out before going live.