Mistakes in Day Trading

Mistakes in Day Trading

Day trading or day trading is the step of buying and selling forex on the same day, which means that positions opened on that day are not transferred to the next trading session or the next day. By making this short transaction, traders will get a profit, although it is small but if it is done regularly it will be quite tempting. However, there are still many who make mistakes in day trading. Here are some mistakes that are often made by day traders:

Averaging Down

Day traders are often stuck averaging down or opening the same new position when the previous position was losing. Unplanned averaging down is gambling and more emotional.

The best way to avoid losses or drawdowns is to work according to the agreed risk management and not have to open new positions if there are no signals.

Trapping Position Ahead of Fundamental News Release

Applying a trap position is usually done with a pending buy stop and sell stop order simultaneously. This is usually done by day traders ahead of the release of important fundamental news and is expected to cause high volatility. To avoid too high volatility, traders usually have set profit targets for each position.

Open Position Immediately After Fundamental News Release

Usually this is done after frequent failures by trapping. Whatever happens, entry in times of high volatility is very dangerous. To open a position, traders usually wait about 30 minutes after the news release.

Setting Risk Per Trade Too Big

This is done because day traders tend to want to trade with large lot sizes to obtain adequate daily profits. Traders are recommended to set the maximum risk per day, not more than 2 percent of the balance on the trading account.

Profit Expectations Less Realistic

As with lot sizes that tend to be large, determining the risk/reward ratio that is too high to pursue daily profit targets is also often done by day traders. A low trading time frame (under 4-hours) will tend to have a lot of noise, so you must be careful and realistic when determining the risk/reward ratio.

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