Oil trading has become extensively popular in today’s world. People are getting biased in favor of the oil trading business and are taking trades with managed risk. Taking trades in the oil market is relatively easy due to the trending nature of commodities. Despite amazing opportunities available in the oil trading market, very few traders can make significant progress based on this profession. Due to some common mistakes, they are always losing money.
Becoming a top oil trader is a very challenging task. You can’t beat the market by trading the tops and bottoms. You need to come up with a unique method that can help you to secure consistent profit. Let’s explore the top 4 mistakes committed by rookie traders.
Taking trades against the trend
The countertrend trading strategy is very prominent among the novice traders. Though the oil market is very trending in nature, few traders learn to trade with the trend. The top traders in the UK always take trade in favor of the trend. By doing so they manage to make big profits. The trend trading method allows you to securely execute the orders. The chances of making big gains are also higher when you focus on the trend trading method. Things might be tough at the initial stage, but once you learn to trade with discipline, you will be able to protect the trading capital.
Learning to trade the trend is not that hard. With the help of a simple trend line tool, you can execute high-quality trades. But don’t trade with a faulty platform. Feel free to read more about the SaxoTraderPro platform so that you can make money without doing complex analysis.
Taking too much risk
In oil trading, you get a high leverage trading account. But taking too much risk to trade the oil is not a justified act. The maximum risk you should take per trade is 2% of your investment. Things might be boring as you can earn more money by taking a high risk. It would have been rational if you were 100% certain about the trade setup. As no one can analyze the potential chance of winning a trade, you must trade with low risk.
Breaking the rules
Novice oil traders always break the rules. They never follow the basic protocols of trading because they consider oil trading as a very easy task. But if you act like them, you are bound to lose trades most of the time. To ensure the safety of your trading capital, you must trade with strict rules. Breaking the rules and trying to earn more money is a very big mistake. Create a trading journal so that you can fix the problems by analyzing past trades.
Never try to be smart and beat the oil market. Try to trade with a fixed set of rules and this will keep your fund safe. Be smart and stop chasing an aggressive market.
Using too many tools
The use of too many tools always makes things complex. You can’t make any money unless you trade with discipline. Professional traders are always taking trades with low risk since it will allow them to embrace more losing trades. Losing trades are very common and you can’t avoid it by using too many tools. Using fancy tools when analyzing the oil price always complicate the things. It is just a waste of time when you use too many indicators that perform the same function. You have to be very safe with your trade execution model.
During your strategy development, come up with a simple system that will allow you to trade with discipline. Forget about the complicated price movement and try to push things to the next level by using a reliable method.