New traders often fall into the same traps and end up losing money – but with these tips from 101investing, you can get off to the best possible start
The world of trading is experiencing a period of heightened volatility due the Covid-19 crisis. However, the number of “new users” signing up to trading websites has increased, with more people looking to profit from forex, crypto, indices, and commodities. Yet, it is common for new investors to make the same mistakes and then lose their initial investment. This happens fairly regularly in CFD trading where most people fail for a number of reasons, i.e lack of experience or guidance, or even falling victim to fraud.
But by carefully choosing the right service provider and following astute advice, novices can quickly progress in the world of online trading. Here, 101investing has three tips to get you up and running.
Just before we get going, it’s vital to understand that a fraudulent service provider would never be authorised or registered with any financial regulation body. 101investing operates under the Cyprus Securities and Exchange Commission (CySEC), which is one of the top financial governing bodies in Europe. 101investing is a CFD broker, offering cutting-edge services, which includes a free demo account for all users. The demo service means you can experience trading in a safe environment, as well as see the quality of 101investing’s platform.
Take calculated risks
The first lesson for beginners to learn is to take small and calculated risks. Many people make the mistake of risking significant amounts on a single trade in hopes of a more considerable gain. If you choose a successful trade, then that method will work. But, if you make the wrong decision, then you will have to earn more to get the same amount back.
Every trader makes mistakes in the beginning, and these mistakes can help provide valuable lessons for those just starting out. Also, note that if a plan does not work for you, try a different tactic. Remember, there is always a new opportunity in the trading market for everyone and thus, moving ahead in a defensive role is the best approach for beginners.
Cut your losses
Even if a novice trader makes half of their trades profitable, the losses would possibly still outweigh the gains. Therefore, it is vital to know the potential risk of a trade, and the profit attached to it. If the risk-reward ratio is not satisfactory, then avoid it.
Also, it is common among novice traders not to cut their losses, and hope recovery is possible. Big mistake. If the losses continue to mount, it requires greater gains than the loss of the previous position to make a recovery. The best move here is to cut losses and start a new trade. Similarly, giving in to the urge to sell the profitable order early is also a mistake. The move can limit your gains, so in another way, you’re losing. Trading with a genuine broker, like 101investing, is beneficial in this regard. 101investing provides tools like “stop-loss” and “limit order”, which helps users maximise gains and mitigate losses.
Many traders might advise you to analyse as much as possible. However, there is a big drawback to doing this. No doubt, knowing the fundamentals and using technical tools for analysis can help with the decision-making. But, when a novice trader uses too many of them, they can become overwhelmed by the data. Some tools in any given chart might show buy indications while others would signal to sell. The best thing for beginners is to analyse those charts that seem straightforward to them. Over-analysis can force novice traders to over-think – leading to confusion as to where the market is heading.
Start with a blank chart to recognise the superficial trends and then add one or two tools for analysis.
How 101investing can help
101investing offers its customers the popular MT4 trading platform to help traders make better decisions. The platform is available on desktop, app, and web versions. Furthermore, the broker has assigned various educational and research portals to help customers with their trading. Traders are able to make good entry and exit points, perform technical as well as fundamental analysis, enhance their knowledge, and much more.
101investing offers customer assistance from 07:00 AM – 05:00 PM GMT, Monday to Friday across a variety of platforms.