Trading Myths That Became Common Knowledge
In the last two articles, I have mainly talked about general trading myths that are mainly common among new traders and those people who know too little about trading. In this installment, I will talk about trading myths that have been around for the longest time and even the experienced traders think that it is what is the norm of trading and how it operates.
Mental Stops Are Good
The last thing that a trader should want to trust in the middle of a trade is a stop loss in his head. The truth is no matter how technical our analysis can be as traders; we still remain human. We will be hoping that our trades play out in one way or the other. I have used a mental stop loss before and that was one of the disastrous decisions I made because every time price got closer to my mental stop loss, I would still push it further away and by the time I realise that my trade is a bad one it will be late and I would have lost a big chunk of my account than the amount that I was willing to lose. Do not trade with no stop losses. Mental stops can only harm us as traders.
There is a wide division between traders when it comes to leverage. The main reason is the fact that very few really do understand what it is. On one hand, there are people who consider leverage to be a bad thing. They see it as a way for brokers to blow our accounts and leave us with nothing. On the other hand, others see leverage as a good thing. They see it as a way to get rich quickly through full utilisation of the tool. Well, the truth is that leverage is neither one extreme but rather occupies a spot somewhere in the middle. Leverage if used properly in relation to your account size is very much beneficial