Everyone is looking to make a big profit in the investment business. To many traders, an investment business is an excellent opportunity to make some quick profit. Some novice traders often believe that by using a complex trading system, they can earn more money. But in reality, the complexity of your trading system has nothing to do with your profit factor. To secure a significant profit from a specific trade, you need to know the perfect trading system.
Hundreds of trading systems are available which you can use to secure big profit. Surprisingly, most professional traders tend to rely on the chart pattern trading system. It allows them to execute trades with low-risk exposure. When it comes to the potential reward, it often exceeds their expectations. Eventually, the traders become excited and start making silly mistakes.
In this post, we will highlight some of the common mistakes you may commit as a new trader. Please read this post carefully, as it will help you manage your trades in a much better way.
Trying To Trade The Reversal
The novice traders always prefer to trade the major reversal. To them, the chart pattern trading strategy is nothing but a reversal trading system. They forget that reversal trading increases the risk factors to a great extent and imposes a significant threat to the trader’s career. Being new to the chart pattern trading system, you should be taking the trades based on the continuation patterns. Once you become good at the continuation pattern trading technique, you may trade the key reversals.
Choosing The Low-End Brokers
The professional chart pattern traders always trade the market with high-end brokers like Saxo Bank. The elite brokers always offer a premium trading environment, and the traders can easily use their advanced tools. They know very well that they will never find reliable trade signals without the proper data analysis. Moreover, the price feeds will be accurate, and thus you won’t have to face any trouble while using the candlestick patterns. Even if you intend to take the trades during the intense volatility of the market, you don’t have to worry about the price slippage.
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Trading Exotic Pairs
After learning the basics of chart pattern trading techniques, novice traders often take their trades on exotic pairs. The price movements of exotic currency pairs are much more different, and it can easily confuse retail traders. Moreover, you will find many false breaks in such currency pairs. It would be wise to use the chart pattern trading system only to trade the major currency pairs to avoid the hassle. Once you become highly skilled, you may trade the exotic pairs, but in that case, you should keep the risk factor below 1% of your account balance.
Managing The Risk Factors
The rookie traders strictly follow their risk management rules at the initial stage. After winning a few big trades in a row, they become overconfident with their actions. Eventually, they increase their risk exposure and try to earn more money. As a trader, you should never forget, the outcome of any trade is entirely unpredictable. Unless you learn to deal with the risk factors strategically, you will never learn to manage your risk profile. You will be making silly mistakes most of the time and eventually blow up your trading account.
Making The System Too Complex
One thing you should never do as a chart pattern trader is making the system too complex. You’re mistaken if you expect to make more money by using a complex chart pattern trading strategy. You need to keep things simple and follow the basic protocols. Try to trade the market in an organized way and follow a strategic routine. Never become emotional while using the major chart patterns—Trade what you see, not what you believe.