Fooled By Randomness
Mistake 1: You trade practically non-stop, trying to open
as many positions as possible. You constantly sit in front of the platform and try to
catch even the slightest price changes.
What it leads to: Your action begin to become more chaotic, leading to
negative results. This is due a potentially large number of rushed trades and
irresponsible money management.
How to avoid: Remember that the financial market is the place where the
number of open trades does not matter. It is better to practise quality over quantity.
Here your result depends not on the time spent, but on the kind of positions you have
concluded and the trading month’s total. If you cannot cope with your emotions, learn
how to use trading robots. It may turn out that you will like this style of trading.
Moreover, RockfieldTrade provides VPS – a virtual server for hosting EAs. The software algorithm
will work even when you are not near a laptop..
Mistake 2: You are trying to trade all assets and
indicators in a row, indiscriminately, trying to become a specialist in everything.
What it leads to: In the pursuit of new material, you do not have time
to learn and master the previous instruments. You constantly miss the appropriate
moments to open positions, according to the signals you have already studied.
How to avoid: In order to learn how to get the first stable results,
begin to understand the behavior of one particular asset and the factors that affect the
change in its price. Select those technical indicators whose operation you understand.
Check out the RockfieldTrade Educational courses and videos. Practice on a demo account. Only
after doing all this should you draw conclusions – such as whether the strategy is
suitable for you or not – before moving on to the next topic. Such a consistent approach
will help you to avoid missing the tools best suited to your trading style.
Mistake 3: You open a rash trade in the hope that the market will
finally turn in your preferred direction.
What it leads to: You become angry and think that the market "moves
only against you". However, this is not the case: the market operates irrespective of
your involvement. If you continue to lament the markets as being “against you”, then you
are jeopardizing all of your trading results.
How to avoid: Accept, once and for all, the fact that such behaviour is
a gross violation of risk management. Yes, once a chart may suddenly turn in "your"
direction. However, if this does not happen on another occasion, you may get a losing
trade – or even more than one. Therefore, learn to say “stop” to yourself every time
such emotions appear.
Mistake 4: You are ignoring supplementary education/practice.
What it leads to: You think that you already know everything about
trading, forgetting that the financial market is a complex, vibrant structure that is
constantly changing and requires more and more new knowledge. The market does not
forgive either the lack of knowledge or excessive self-confidence, quickly putting
everything in its place.
How to avoid: Attend RockfieldTrade webinars, study Educational courses, deepen
your practical skills and socialise with like-minded people on social networks. This way
you will evolve not only as a trader, but also as a person.
Mistake 5: You ignore money and risk management.
What it leads to: After each unsuccessful trade you understand that you
were in the wrong but continue to blame somebody else (or the circumstances).
How to avoid: Invest just a small percentage of your account balance
amount into a position. Experienced traders often open trades of 5-10% and do not keep
the entire deposit on the trading account. This is because there is the reliable RockfieldTrade
Wallet: with it, part of your deposit is protected from market fluctuations. Try to
comply with this rule and evaluate its effectiveness.
Mistake 6: You do not have clear rules for opening and closing
positions – instead you choose to trade randomly.
What it leads to: Regardless of your experience, you turn into an
amateur who relies only on luck and intuition. However, in fact, one of your mistaken
trading ideas follows on to another, and continuous research of strategies fails to
bring any results.
How to avoid: Remember that a trading plan is a document that can be
called a "passport" of your trading. For tangible results to appear, need to accustom
yourself to such creating a trading plan for several months. Each week, you need to
analyse your positions and adjust the strategy. By the way, its conditions should be
written on paper, by hand. You should also clarify under what conditions you will both
open and close a See the next card.
Mistake 7: You do not keep a Trader's Journal and do not analyse it.
What it leads to: From month to month you get the same results, which
leads to disappointment in trading.
How to avoid: It’s worth understanding that if you don’t know the kind
of trader you are, or the advantages and disadvantages of your trades, then you will not
be able to develop. A Journal is a mirror that demonstrates the essence of your trading
style. It protects you from committing the same mistakes. Having studied the weaknesses
of your strategy (or even the manifestations of your emotions), you can find the right
solution.
Mistake 8: You are not taking a break from the market.
What it leads to: Loss of concentration, lack of new ideas,
nervousness, potential quarrels with loved ones and poor health.
How to avoid: Learn to relax and not be distracted. Start writing down
how much time you spent on trading and the results you achieved. Paradox: if you start
monitoring the market less, it will positively affect your productivity and interest.
Mistake 9: You substitute trading for an emotionally charged life.
What it leads to: You perform deliberately risky operations only in
order to experience a range of all kinds of feelings. As a result, rash actions can lead
to an unsuccessful bidding outcome.
How to avoid: Accept the fact that the financial market is intended
primarily for work, not for adrenaline. Live a busy life, enjoy every day, try new
things, travel, do what brings you positivity, and then you will have a different
attitude to trading. You will begin to trade calmly and make informed decisions.
Trade Responsibily: There are several prop trading risk management strategies to boost profits. Effective risk management is one of the key skills to succeed with prop firms. Managing trading risks helps mitigate losses and protect the prop-funded capital – resulting in long-sustainability. As a forex trader yourself, learn to identify, assess, and mitigate various risks – while earning consistent profits with a prop firm.
As a reputable prop firm, Funding Traders encourages all clients to prioritize risk mitigation during
the evaluation and funding stage. Traders will consistent risk management are eligible to stay
consistent, trade bigger, and earn up to 100% profit split.
Maintain consistent position sizing to manage prop trading risks and increase profit potential.
Before opening a new position, carefully evaluate the maximum amount you are willing to risk on each
trade. Ideally, your position size should depend on personal risk tolerance and the current
volatility of a currency pair. This way, you can maintain consistent performance and avoid
overcommitting to a single position.
Funding Traders employs a 2% consistency rule for all clients. To minimize losses, you are required
to maintain a consistent risk of 2% on each trade.
Keep in mind your position sizing will also depend on your preferred trading strategy. For instance,
swing traders may consider risking even bigger amounts to maximize profits in fewer trades.
Meanwhile, scalpers may prefer limiting risk on each position to capitalize on multiple frequent
trades. Definitely, consistent position sizing is one of the key prop trading risk management
strategies for sustainable profits.
Stress testing is one of the advanced prop firm risk management strategies to maximize profits. These
tests help evaluate the performance of your trading strategies during different market events. By
stress testing positions, you can adjust your risk management strategies before a vulnerable
situation.
Leverage the prop firm’s trading platforms to run simulated environments and test your strategies
for economic downturns, major price fluctuations, and other high-risk events. This way, you can stay
prepared and make risk-focused decisions in all scenarios. Indeed, conduct stress tests for your
risk management strategies for consistent profitability.
There are several strategies to manage prop firm trading risks for maximum profits. As a fundamental
prop trading rule, you are required to maintain a consistent position sizing – risking below 2% of
initial capital on each trade. Leverage our multi-instrument support to minimize risks and earn a
competitive prop trading profit split from various financial markets.
You should also set stop losses and take profit orders to automatically open/close trades as per
pre-defined requirements. While trading, strategically utilize trading leverage to reduce risk
exposure for your funded account. Plus, you can perform continuous stress tests to optimize your
risk management practices for all market events. Follow the points above for proven prop firm risk
management strategies to boost overall earnings.