Trading Psychology · 2023-08-21

Classic Mistakes About Investing and Forex Trading That Very Few People Know

Today's topic is about the mistakes that most investors and traders make when they first enter the market.

There are mistakes that we do not know about and always think are correct. It is precisely those mistaken beliefs that make us lose money again and again in the financial markets. And if you can limit these mistakes, making money from trading or investing will no longer be too difficult. The content of this video is for those of you who are trading and investing in the forex, commodities, crypto, digital currency, futures and also stock markets.

Within the scope of this video I will combine the concepts of investor and trader into one. In a certain sense, a trader is someone who holds positions for a shorter time than investors. Leaving aside the time factor, traders and investors both buy or sell assets and want to make a profit from them.

The financial market was created by genius minds, and it targets a fundamental trait of human nature: greed. And over time, the elite of humanity have designed a game in which, in the long run, most participants will lose. And in order to easily take money from our pockets, they have hidden the truths about this risky field and planted mistaken beliefs in our heads.

Mistake No. 1: Trading and investing are a way to get rich quickly

This is one of the most classic mistakes that we fall for when we first step into the financial market. Because what we see is that this job looks very simple. It is described as sitting in front of a computer screen, watching green and red candles dance and clicking a mouse to make money. Trading is designed to be very simple so that anyone can take part anytime, anywhere, with almost no barriers at all. All you need is a phone connected to the internet and then you can freely trade and exit trades at an incredible speed.

But wait, why is it so easy! Usually, traps are designed so that the prey can easily walk into them without feeling any suspicion.

The misconception that trading is a way to get rich quickly

Sadly, I have to tell you that investing and trading are not a way to become rich quickly. This is a negative-sum game, not a zero-sum game. That means one person's money moves into another person's pocket and a portion of the money is counted into other costs. So if someone makes money, someone else will lose money, or lose a lot of money. However, what we see on the internet or through brokers is all a very bright picture. They show us many people who can make money, or make a lot of money, from trading and investing. But those are few, very, very few among the millions of people participating in the financial market.

What we are shown and told is the tip of the iceberg; what is hidden deep below is that more than 90% of traders lose and lose money. The rest are successful traders, but they did not achieve that result easily either. The financial market is a place more brutal than any war. What we see are those green and red candles running on the screen, but behind them are tens to hundreds of thousands of traders fighting each other every minute, every second, even every millisecond, with automated trading systems, and the weapon they use is US dollars.

There is no way to make money easily and quickly in the financial market. This is a market designed to make most participants lose money. Trading and investing are a long-term and serious job. To make money and succeed takes a great deal of effort and many years. Do not listen to others saying that trading and investing are a quick way to get rich — as the classic saying goes, free cheese only exists in a mousetrap.

Mistake No. 2: Just watch a few tutorial videos and read a few books and you can succeed at trading

If you are a working person, how long did it take you to understand your job well? 6 months, 1 year or 3 years…

With jobs involving manual labour and physical strength, we only need a few days to be able to do them and it does not take much time to become proficient at them.

At a higher level are office jobs: you spend 4 – 5 years at university building a foundation of knowledge. Then, when you step into a new job, we need a few months to 1 year to become proficient at it. But to move up to a higher level, we need several years…

Even higher are the people who run a business or own a business. They spend many years accumulating experience and knowledge and making many mistakes before reaching success. And it is not certain how long they can stay at that peak.

Trading and investing, meanwhile, are at a higher level than all the jobs I have mentioned. It is the pinnacle of capitalism. So is it reasonable that you only need to watch a few videos and read a few books to succeed at financial trading?

This question seems easy to answer, but we ourselves do not want to believe it is true. A few courses, a few videos or a few books are only enough to give us a little knowledge about this job. To succeed at it requires a lot of time for us to train, experiment many times, make a great many mistakes and gradually improve those skills.

I am a practical person; perhaps what I share makes you feel disappointed. But that is the truth and I think that only when we look at the truth correctly can we change.

What I hope is that you can change the way you view this job.

For manual jobs, we will need a few days to learn and can do them proficiently in a short time. For office jobs it may be a few months and even a few years to achieve something.

Or some other specialised jobs such as fighter pilots or surgeons. Do you think pilots and doctors only need to read a few books and watch a few videos about their job? Then the pilot climbs into a plane worth tens of millions of dollars to fly it. Or a doctor, after finishing 1 book about heart transplants, folds the book shut and rushes into the operating room to perform heart surgery on a dying patient.

It is really absurd, isn't it? Investing and trading are even more difficult than the jobs I listed above. It is not taught in any school, yet it is designed so that all of us mistakenly think it is simple.

That is exactly why most people who participate in the market lose. Successful traders are people who persevere and learn after many failures and gradually understand the nature of this job. The majority, meanwhile, will give up very early.

Mistake No. 3: You can turn a small amount of money into many times more with trading and investing

Challenges to turn 100 USD into 1000 USD or videos related to multiplying an account many times over in a short time. They make us mistakenly think that this is really easy and that anyone can do it.

Do a simple calculation with compound interest: if they could double their account every month and start with 100 US dollars, in 3 years they would turn it into 6.871 trillion US dollars. A truly terrifying number. If so, they would become one of the richest people in human history ever.

Such video content distorts our perception of this trading and investing job. The right thing here is that with a small amount of money, we start learning how to trade and invest. The idea here is that we will trade with a small account, and when your trading skills get better, that is when we will raise our capital, moving from the learning stage to making money from trading.

When you first participate in forex investing, you can start with a small amount of about a few hundred dollars or less. Our goal is to learn how to trade and not to lose money in the market. After that, we will aim to make a profit and to make a regular profit every month. Maintain stable profits over many months, and that is when we proceed to raise our capital.

You should not do the opposite of that, because sooner or later we will lose money. That is unavoidable, and I think losing less money is better.

Consider it tuition, and we need to be serious if we truly want to succeed at this trading and investing job.

Mistake No. 4: Day trading is an easy way to make money

If someone tells you that day trading is a way to make money quickly, that is true. But the person making the money is certainly not you.

Day trading is a really difficult job and demands endurance. It requires extremely high psychological stability, capital management and discipline. Trading is an addictive job and day trading is even more addictive. And for those of you who are just starting to participate in trading and investing, it is easy to be drawn into this spiral.

At present, I am also a day trader, holding positions for short and very short periods of time, and I find it really is a difficult job that needs endurance.

My advice is: If you want to make money quickly with day trading, it is not really suitable yet. But if it is to train your skills, then day trade with a small amount of money, even a very small amount. Day trading will be an excellent training environment, because the number of trades is very large and the pressure is extremely great, both psychologically and in having to make decisions in a very short time. And we will make mistakes faster and learn a lot more.

So, for those of you who are just starting, consider day trading as a way to speed up your training, and do not expect it to be a tool to make money quickly and easily.

Mistake No. 5: Trying to find the holy grail so you always win in trading or investing trades

The holy grail is the cup used to drink wine by Jesus at the Last Supper. In trading and investing, the Holy Grail means the secret or method to always win in all trades. There is a truth: we do not need to win all our trades to make money. And there is no trading method that guarantees a 100% win rate either. Just like a football team, they do not need to win all their matches to become champions; what they need to do is avoid mistakes and take advantage of opportunities to score. Trading is the same!

The important thing we do is protect our account before thinking about making money. And because the market is formed by thousands of participants and the market moves with no rules at all.

If some rule did exist, then surely the physics and mathematics genius Isaac Newton would have found it. But Newton himself also lost badly in the stock market and had to declare bankruptcy. He left behind the classic quote: "I can calculate the motion of the stars but cannot imagine the extent of human madness."

Therefore, you do not need to waste time and effort trying to find the holy grail in trading. Find a trading method that suits you, and that method is profitable in the long term. Practise and study it instead of jumping from one method to another. When you master it, money will come to you on its own.

You have just heard 5 mistakes that almost all of us make when we first participate in the financial market. It will take a lot of time for us to recognise these misconceptions, and if they are deeply ingrained in our thinking it is very hard to change them. Trading and investing are a serious job and they are not easy for making money and getting rich quickly.

We cannot just watch a few videos and read a few books and be able to succeed and make money from the market. Or expect to be able to turn a small amount of money into a large fortune overnight. And short-term day trading is suitable for experienced people; for those of you who are just starting, consider it a way to practise.

Finally, there is no perfect trading method. What we need is to find ourselves a trading method that suits our personality and ourselves. Practise it until proficient and use that edge to trade; it will bring regular profits in the long term. That is what we need to aim for.

I am here to share my personal perspectives during my process of researching and trading in the financial market.

I have participated in crypto digital currency, binary options, the commodities market, Forex and also stocks. I realise that, in essence, all markets are the same, and I hope that my videos will in some way be useful to you on your journey to find income from trading and investing.

Thank you for reading to the end of the article. If you have any questions or want me to make a topic, you can comment; I will listen and respond. If you like it, please like and share so that more people know about this content. Wishing you an effective trading week.

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