Trading Mistakes: no strategy
IG senior market analyst Axel Rudolph explains a common trading mistake known as 'trading without a strategy'.
IGTV financial analyst @AngelineOng caught up with him to find out how beginners and experts can create and test a trading plan to minimise risk and maximise gains.
(Video summary)
Having a well-defined trading strategy
In this video, we emphasise how important it is to have a plan when it comes to trading and making money.
IG senior market analyst Axel Rudolph explains explains that if you don't know what you're doing, you shouldn't expect to make profits. He argues that trading is not a simple coin flip, but rather a difficult challenge with many obstacles stacked against traders.
One obstacle discussed is the spread. This refers to the difference between the price at which you can buy something and the price at which you can sell it. This spread can eat into your potential profits.
Another issue is commission, which is a fee that you have to pay when you make a trade. This fee also reduces your potential gains. Axel also mentions slippage, which is when the market's volatility causes you to miss out on getting the desired price for a trade.
Safeguarding profits
Given these challenges, he advises traders to have a well-defined strategy in place. He suggests testing the strategy on a demo account to see if it works before using real money. By doing this, traders can gain confidence in their strategy and ensure that it will be successful.
He also encourages starting with small trades to minimize risk and continue making positive returns. To illustrate the importance of having a strategy, Axel compares trading without a strategy to driving a car without knowing how to drive. Just as driving without training often leads to accidents, trading without a strategy can result in financial losses.
Therefore, the main message is clear: to be successful in trading and make money, you must have a well-tested strategy in place. Otherwise, you're exposing yourself to unfavourable odds and potential harm.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.