When trading, one simply cannot avoid making mistakes. But mistakes only exist to teach us something. In other words, the help us become better. However, it is useful to know what mistakes other traders make most often so that you are able to avoid them.
If you’re new to the stock exchange trading, everything seems so new, and maybe you do not understand everything as well as you should, which of course means you will not be profitable right away. That is the reason why the so-called social trading, or copying traders, is a good idea at this point. All you have to do is provide the necessary funds, using any broker. From then on, another trader will be handling your investment.
For example, the eToro broker offers this kind of investment. But first, let’s quickly state what social trading is and what its benefits are.
What is a Trader Copying System?
The principle of the trader copying systems rests in you choosing a trader according to your preferences. The system will then automatically copy his trading activities in real-time. When he earns a profit, you will earn money too. On the other hand, if he loses a trade, so will you. At eToro, the traders whose trading strategies can be copied are called Strategy Providers, but this method of copying is also available, with other brokers, for example, PurpleTrading broker.
Benefits of Copying Traders
Copying traders may seem very convenient and profitable, especially if you don’t have enough time to trade or if you do not place too much faith in your trading strategy. Of course, regardless of their trading strategies, experienced traders do not always make money, but they will definitely be more successful than a beginner. They usually have a sophisticated trading system based on their own many years of experience.
Disadvantages of Copying Traders
What seems to be an advantage, at first sight, can also be considered a disadvantage. Of course, if you want to learn to trade, you will not learn to do it by automatic copying. You need to create your own trading system, make your own mistakes, and maybe even experience several bankruptcies, just like many of today’s successful stock exchange traders. And last but not least, the traders you copy do not let you do it for free. They are rewarded with a commission you pay for their service.
Forebel as one of the Strategy Providers on PurpleTrading
One such trader who, like so many others, has built a name, or rather a nickname, on his initial failures and bankruptcies, is a Slovak guy going under the nickname Forebel.
Forebel is one of the authors of the Rebel solution 1 trading system, which you can get involved in through PurpleTrading. Forebel is not the only strategy provider on PurpleTrading, but the path that led him to forex trading is very interesting and certainly motivating for many new traders. So, let’s talk about Forebel briefly.
Kitchen assistant who decided he’d get rich on forex markets
Forebel began trading on the stock exchange in 2008. Until then he worked as an assistant in a kitchen in a London restaurant. The man who told him about forex trading has done so in a way that would certainly discourage many others, as he was at the time making money after his first bankruptcy. But Forebel chose not to focus on the negative side but rather on the positive one – becoming his own master. This is often a common motivation for both successful and unsuccessful traders.
How to develop into a successful trader?
So how not to fall into the box of those unsuccessful traders, but to become as successful as Forebel?
Shortly put, you need to be patient, purposeful, systematic and find a good broker. If you want to know more, let’s talk about the most common mistakes that starting traders make, so you can avoid them.
- Never skip a demo account
The vast majority of brokers allow newcomers to try trading on their demo account and you, as a new trader, should definitely make the best out of this opportunity.
The demo account behaves just like a real account with just one difference. The money is not real, so a loss does not affect you. And you are not afraid to take risks. However, the demo account also makes it easy for you to conclude that you already know everything, that you know how to do it, and that you can now trade with real money. But that’s the problem!
You certainly cannot compare the comfort you experience on a demo account with the psychological exertion of a real account, yet you shouldn’t skip this step anyway. You can try a lot of things on your demo account and form your basic strategy.
- Beware of the treacherous beginner’s luck
If you’re doing well for a long time on your demo account, the next logical step is for you to switch to a real account. But this is when real money comes to play, which is why you should be very careful about your investments.
After a few months on the demo account, you will definitely not have a bulletproof strategy formed, but not even professionals do. So, if you are very successful in the beginnings, do not rest on your laurels, because the fall will inevitably come sooner or later. Even the most experienced strategy providers know that this is true. No one’s ever only profiting.
You will even get to know the specific way of dealing with emotions that we use ourselves.
- Mistakes are inevitable
Your first ‘unfortunately’ will eventually form into ‘thankfully’. The trial-and-error method has produced a large number of successful traders, who have not been successful at all when they started and who have gone through several bankruptcies. And it is these mistakes and bankruptcies they value the most. It is true that one learns from one’s mistakes. Whether you are a beginner or a professional trader, you will not be able to avoid mistakes. Nobody trades profitably at all times.
- Do not pay much attention to Internet discussions
Perhaps the worst thing you can do in your early trading days is to shape your trading strategy according to traders’ experience they share in online discussions.
Of course, the experiences of others can be useful. They have made a mistake and you don’t have to. But the opposite is also true. If they don’t make a mistake, that doesn’t mean you cannot. You can. And that’s the point. Wisdom and knowledge should only be drawn from the very best – from really experienced traders.
Of course, successful traders may appear on the Internet as well, but you’ll hardly recognize a seasoned trader from a lying or a new trader. Instead, it is better to focus on your personal development and understand the true trading principles.
- You can’t expect profits every day
If you expect your trading to be profitable every single day, get ready for a big disappointment. You have to be patient and accept the fact that you will face days when you’ll lose, maybe even hit the rock bottom. If you do not let go of the idea that you only have to do well, you will make unnecessary mistakes. Even professional traders do not earn every day or every month.
- The fall will come, whether you want it or not
It is not possible to succeed without failure. You have to learn to endure losses, just like any successful trader. The system does not exist without losses. Good and bad periods alternate with beginners and experienced traders.
- Have a system and backup plan
The market will never behave the way you want it to, so you should not be taken aback when it suddenly moves in a direction you initially did not anticipate. It is pointless to try to find answers to why it is so. Instead, you should have your system and a backup plan.
- Don’t complicate what can be done easy
When a broker says intraday trading or scalping is one of the most profitable ways of doing business, you might believe him. But the broker doesn’t say who’s the most profitable player. Not you as a beginner, of course, as it is a very hard and time-consuming way of trading in which you can’t afford to make mistakes.
In addition, during scalping, you do several trades a day, often opening and closing them within minutes. And, of course – with each open and closed deal, you must pay the broker a fee for the trade or spread.