1.No risk management– as you know that trading is all about risk management, 90% trader fail because they don’t have risk management and if I tell you the minimum risk-reward ratio for the consistent trader is 1:3 it means you are risking 1 Dollar for making every 3 dollar the advantage of this risk-reward ratio is if you have 50% trading accuracy and you follow 1:3 risk-reward ratio at the end of the month you will be profitable, your profit and loss position will be positive. let’s take an example, suppose you are taking 20 trades within the month so 10 wins and 10 loss (trades will be right because of 50% trading accuracy) when you win you will earn 3 so (3*10)=30 profit when you lose you will loss 1 so (1*10)=10 loss, so your profit is 20 dollar still. this is the benefit of risk-reward ratio and in the trading risk-reward ratio is very important.
- oversizing position; it is second important things for the trading is oversizing trading I had seen most of the time traders make huge losses because of the oversizing their trading positions,
- Oversizing destroys equity by triggering catastrophic losses that cannot be overcome
- the problem starts with a misconception that you need to trade large size in order to make money or to compete with the market’s
- Get control by ignoring margin when working through the details of your intended entry.
so don’t oversize your position
3, no stop loss some time trade loss because they don’t use stop loss in their trading position but stop loss is very important yes I agree it gives sometimes a pain but full-time gain, stop-loss is the biggest teacher for a trader, a stop loss meant to protect you to yourself.
- no strategy this is the fourth important point for the trading, trader make losses because they don’t have any strategy, as I am a price action trader I always forecast chart then I wait for indication then confirmation and then finally I initiate trade so I have a full planed trading setup when I have to enter in trade and when exist.
5, no education I had seen lots of traders who don’t know any kind of technical term of the forex and they start trading and investing before any kind of study these types of people make huge losses from the market and as you here the trading is gambling, it is not actually, people make losses because of there own mistakes and then these types of people say trading is the speculation, it will be speculation when you trade with knowing how to trade “Learning is the key, to be a consistent trader learn everyday with market condition”
