Success in trading depends not only on strategy, but also on avoiding mistakes that are often made by new and experienced traders. Here are 5 common mistakes made in trading:
1. Trading without a plan
A clear plan is essential for successful trading. Often traders enter the market without a plan, which leads to losses. The trading plan should include entry, exit, stop loss and risk management.
2. Taking too much risk
Most people take too much risk in the pursuit of quick profits, which can be the biggest cause of losses. It is better not to take more than 1-2% risk on each trade to keep the account safe.
3. Making emotional decisions
Making decisions in a panic during market fluctuations can be dangerous. Instead of trading under the influence of greed or fear, always stick to your plan.
4. Lack of proper knowledge about the market
A thorough market analysis and knowledge of various factors, such as news, time frames, and chart patterns, is essential before trading.
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The biggest reason is that Algo Trading is free from human emotions. In traditional trading, fear or greed can affect decisions, but Algo Trading does not include this factor. The computer simply works according to data, which helps reduce losses and increase profit opportunities.
Another advantage of Algo Trading is that it analyzes market data quickly. It is possible to execute millions of orders in seconds, which is not possible for human traders. Especially in fast-paced markets, where prices change in moments, Algo Trading gives excellent results.
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