Research commissioned by online trading provider Global Prime found that almost 1 in 5 Aussies (17%) have made significant trading losses on a bad investment or trading decision.

27% of Australians say they’ve generally never made a bad financial decision regarding investing or trading.

Almost one third (29%) of the people who had lost money trading  blamed inexperience, while another 23% attribute their failure to not cutting their losses soon enough.

Almost 1 in 5 (19%) say they were poorly advised.

 

“It’s especially important for young people, and all first-time traders who may be inspired to enter this world through what they see online or ‘finfluencers’ on social media, to take the time to educate themselves on any potential downfalls, so they can avoid making those mistakes moving forward,” Global Prime’s Elan Bension says.

 

4 of the most common investing mistakes first-time traders or investors should seek to avoid

1. Not asking to see trading receipts 

“Asking your broker questions like ‘do you profit off client losses?’  or ‘can you share the trading receipts with me?’ for example, will make it clear you are going to hold your broker accountable,” Global Prime says.

“Keep in mind that if a broker does not offer trade receipts showing they were not on the other side of your trade, you won’t know for sure if they’re profiting from your losses.”

 

2. Not enough emphasis placed on the psychology of trading

“You can have the best strategy in the world, but without the right mindset, a trader is bound to lose eventually,” Global Prime says.

“Unless a trader has learned to manage their impulses and emotions, they will most likely run into problems.”

 

3. Trading without a plan or strategy in place

“Trading without a plan can and should be likened to gambling. Eventually the ups and downs a trader goes through will lead to poor decision making and ultimately to the loss of capital,” Global Prime says.

“Having a set plan and strategy in place and journaling trades helps to stick to the plan which means not making decisions on the fly.

“Knowing when to enter and exit a trade before the trade is entered and not adjusting mid-trade will help you to stay on track.”

 

4. Not finding the right mentor

“It’s information overload online when it comes to finding a strategy to trade with, and it can be tough for a beginner to sift through the information and formulate a plan,” Global Prime says.

“Having a great mentor can really help push a trader in the right direction, and if they take it seriously, they can be held accountable to their trading mentor as well, just like a sporting coach.”

You can find more expert trading tips here.