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How To Avoid These Common Trading Mistakes With A Free Trial

How To Avoid These Common Trading Mistakes With A Free Trial

The world of trading is now much more accessible than it was even five years ago. Even if you do not have a background in finance or substantial private funds to play with, it’s still possible to gain access to the markets with a funded prop firm account. This lowers the barriers to entry for traders with little or no previous experience. 

However, it is important to be aware of the business model that most prop firms operate with: they require the profit share generated from traders in order to survive and keep growing. Therefore, although it’s possible for inexperienced traders to gain access to their platforms, they need to know that you can follow certain processes and avoid making poor decisions.

The no experience, no access conundrum

So, how do you gain this experience and prove your skills unless you are actually able to trade live in the first place? One of the best ways to do this is by undertaking prop trading training with a free trial. This way, you will be risking none of your own money, and will have the chance to test your mettle in simulated market conditions. 

The first rung on the ladder to a profitable career

Many traders graduate from a free trial to an evaluation program, and if they are successful, gain access to leveraged accounts of $10k – $100k, with a scaling profit share of between 50 to 80 per cent. The most skilled traders will eventually be able to command accounts of $6m + with bi-weekly payouts, offering the opportunity to make substantial profits.

Trading forex or futures is a really exciting journey, and could even lead to a whole new career. Everyone has to start somewhere, and if you choose to begin your journey with a free trial, then you really have nothing to lose. However, you will travel much faster and much further if you do some prior research and learning.

Common errors new traders often make

Here are some of the most common trading pitfalls awaiting new traders, and how training with a prop firm trial, such as those offered by FTUK, can help you to avoid them.

Jumping in with both feet

If you are drawn to the idea of trading because it seems like an easy way to make a quick buck, then you need to think again. Successful trading requires a good level of basic knowledge about what drives the financial markets and how trading works. You will need to know different trading techniques and terminology, and the relevant economic data to follow.

Both forex and futures trading can be complex, so it’s essential that you equip yourself with a certain level of knowledge before you dive in. This will make you more confident in your trading decisions and help you hit the ground running. 

This might seem to be a rather daunting prospect, but it can also be stimulating and enjoyable: the very best traders are not focused with a basilisk stare on turning a profit, but relish the whole process of researching, evaluating, and speculating. 

There’s a wealth of learning resources available that provide useful and clear information and tips about all aspects of trading, from risk management, putting together a strategy and developing a strong trading mindset. There are also forums and social media accounts where you can interact directly with other traders, and exchange advice and ideas.

Why a free trial will help

When you undertake a free trial, you will be able to apply your learning directly to live trading situations, which will reinforce your knowledge and transform it from abstract concepts into an active process. This helps to build your confidence and will also highlight any gaps in your learning that you can work on.

Not having a clear trading strategy

One of the most common mistakes new traders make is assuming that all they need is a hot tip from social media to place a trade, or even that they have an ‘instinct’ for finance and that their trade will turn out fine. However, this is little better than gambling and is definitely not the path to making consistent profits.

Experienced traders will never enter a trade without first defining their exact entry and exit points on the market are, the position size, and the maximum amount they are willing to lose. These decisions will be based on objective research and analysis to anticipate future price action. 

No one can ever be 100 per cent correct all the time, but it greatly lowers the element of risk to have a clear trading strategy. 

Furthermore, you need to have the strength of mind to be able to stick to your strategy even in the face of market volatility. New traders often panic into buying or selling at the first sign of a downturn, only to get caught out when the market rallies. 

How a free trial can help

During the trial, you’ll be able to roadtest your strategy without the additional pressure of generating real profits or losses on your account. You’ll gain exposure to making real trading decisions, helping you to develop the mental resilience to stick to your plan, and how to bounce back quickly from any mistakes you make.

Neglecting risk management

Successful trading is essentially about managing risk effectively. New traders often focus too heavily on making big profits, and neglect to put in place a robust risk management strategy. 

This is particularly dangerous with forex or futures trading, because of the high leverage ratios available, which means that you can open large positions with just a fraction of the capital in your account. This opens up the possibility of making substantial profits, but the downside is that it also exposes you to the potential to make damaging losses.

How a free trial can help 

If you trade with a prop firm, any losses you make will be covered by the firm, but most firms will require you to have a risk management strategy in place, or your account may be closed. You will need to operate within the firm’s in-house rules, so make sure you understand these clearly. 

The free trial is an excellent way to make sure that you can follow a risk management plan at all times. 

As a minimum, you will be expected to set stop-loss orders, calculate risk-averse position sizes, and manage risk-to-reward ratios. Your free trial will allow you to practice these skills in simulated trading conditions. 

Underestimating the importance of the ‘trading mindset’

New traders do not only need to have technical knowledge, but also some insight into the psychological side of trading. This might seem like something you can put off until you are at a more advanced level, but in fact it’s important to get to grips with it right away. 

This is because new traders will often subconsciously make decisions that are led by their emotions, rather than base them on objective research and logical thinking. This can lead to unprofitable or unplanned trades that are not aligned with a risk management strategy. 

For example, a common sign of a psychologically underprepared trader is cutting winning trades too early in an effort to secure a profit. This behaviour is driven by a fear of losing out and greed to make an instant gain, prompting the trader to deviate from their strategy and miss out on the full profit potential. 

Conversely, novice traders will often hang on to a losing trade in the hope that the markets will turn, rather than admit defeat and cut their losses. This can turn a small error into a much bigger and more costly mistake. The experienced trader knows how to take loss in their stride, and put aside any feelings of failure, shame or desire for revenge. 

How a free trial can help

It’s impossible to develop the emotional discipline necessary to be a good trader without any experience of how you are going to react in live market conditions. You may think that you have a cool head and are able to handle anything, but when it comes to making money, very primal instincts come to the fore and we are all susceptible to them.

In fact, traders who feel that they are invulnerable can fall the furthest, because they tend to be overconfident and assume they are always right. During your free trial, you will be exposed to live market conditions, and this is an invaluable opportunity to learn how to put aside those inevitable moments of fear, greed, and frustration, and manage your emotions. 

Your trial is your chance to prove to yourself and the powers that be that you’ve got what it takes. These important but achievable points of advice will help you to steer a steady course to success, and be ready to take the next step in your journey.