Ask any trader out there and they’ll tell you their very own horror story about how they committed the worst trading mistakes that resulted in almost, or in some cases, entirely, wiping out their whole trading account.
That said, not a lot of traders are open to sharing their stories with the general public. After all, no trader would like to be known as the trader who lost an xx amount of money after doing trading mistake #1. Even I would probably hesitate to share some of my worst trading mistakes in all my years of trading (and I’m telling you, I’ve had lots).
That’s why I greatly applaud traders who are open to sharing these kinds of stories. Although they’re horrific, and more often than not, quite embarrassing, many beginner traders would definitely appreciate hearing about these mistakes for educational purposes.
Speaking of which, I recently received an email from a trader with the subject: “HELP! I WIPED OUT MY BINOMO ACCOUNT!” Alarmed, I immediately opened the email.
SUBJECT: HELP! I WIPED OUT MY BINOMO ACCOUNT!
The email included screenshots showing how the trader accidentally wiped out his Binomo account. Out of 5 consecutive trades, the trader only won 1 trade. Each of his trade lasted only 1 minute, but the trader still lost $4000 in a single day.
That’s definitely a devastating outcome for anyone who wanted to earn money through trading but ended up losing money instead. Many other traders who I shared this story with felt various emotions as I told them the story.
For many of them, there was one prevailing question: “How can a single trader lose this much money in just a short period of time?”
Surely, hearing about these types of stories is enough to strike fear into the hearts of any trader. But while an experienced trader might have an idea just by looking at the trading history of this particular trader, beginner traders probably wouldn’t be able to tell as easily.
In today’s article, I’ll outline some of the worst trading mistakes you can ever commit in your trading career.
Worst trading mistakes that can wipe out your Binomo account
Investing too much money on a single trade
Imagine this scenario. You’re entering a new trade. You think this market will be going in a specific direction, like up, for instance. You really feel strongly that an uptrend is coming soon. Since you’d rather follow your gut feel, you decide to invest a lot of money into this one trade. After all, if you put in a lot of money, you’ll also get a lot of money back, right?
Unfortunately, that may not be the case. If the trade ends up in a loss, then you’ll also lose all that money that you thought you were going to profit from.
That’s exactly what that trader who sent me the email did. He invested too much money on one trade, thinking it was going to give him a huge profit. Sadly, it turned out to be a huge loss instead. Remember, there are always risks involved during trading, and profit is never guaranteed, not even on your demo account.
Doing this just a few times, again and again, can certainly wipe out your Binomo account in no time at all. Are you familiar with that old saying, “Don’t put all your eggs in one basket?” That’s basically what you’re doing when you’re investing a big percentage of your account balance in just one trade.
This trading mistake, whether you admit it or not, typically stems from greed. You think you’re going to profit a lot in a short amount of time, so you decide to forgo all logical thoughts and trade using gut feel. In our Beginner Trader’s Guide To Avoid Losing on Binomo, we mentioned how investing too much money on a single trade can be one of the worst trading mistakes for any trader out there, especially beginner traders.
If you want to protect yourself from this kind of mistake, you should know proper money management techniques. One of these is not risking more than 2% of your account balance on a single trade alone.
Trading using only one strategy, tip, or technique
We all love our holy grails. Regardless if it’s a product, an item, or, in the case of trading, a specific strategy, tip, or technique, many people tend to look for their holy grails in life and stick to it, no matter what.
Well, as with everything, sticking to what you think is your holy grail can be one of the worst trading mistakes you can ever commit.
Simply put, there is no such thing as a holy grail strategy, tip, or technique in trading. Different things work for different scenarios, so it doesn’t make any sense to continue using the same strategy all throughout, without analyzing the specific situation you’re in.
A lot of successful traders will agree that there wasn’t a single strategy, tip, or technique that made them successful. The only objective was to maximize earnings and minimize losses. Other than that, everything is decided on a case to case basis.
Part of the reason why trading using holy grail strategies is so dangerous is that it’s also a type of emotional trading. Traders usually search for hot tips and ‘most effective’ techniques because of fear. The uncertainty of trading causes them to get scared, so they stick to ‘tried and tested’ holy grails, especially if it’s from popular, successful traders, in the hopes of earning profit.
Sadly, those popular, successful traders have nothing to lose if you follow their tips and it turns out to be ineffective in your case. You know who does have everything to lose? You! It’s your own money, and if you lose trades consecutively, it’s your own account that you’re going to wipe out.
Remember, even successful traders can lose trades sometimes. But no matter what happens, they’re always careful not to wipe their entire accounts. They know better than to let their emotions get the best of them. Through emotional control, proper money management, and good decision making, successful traders can stay on top of their game for a long time.
Trading against the trend
I’ve already mentioned this in another article before, but trading against the trend is simply not recommended for anyone. In fact, doing so can cause your Binomo account to get wiped out.
Why is that? Trends are a good indicator of which direction the price is going. It doesn’t make sense to go against it. Why will you sell if you can see the prices are rising? Why buy when the prices are falling? There’s simply no good reason for it.
Here, you can see some important points regarding the trend in this chart.
- There’s a continuing uptrend. It’s obvious from the chart that a strong uptrend is happening here. This is a good place to enter a higher trade. However, you can see here that the trader in our example chose to trade against the trend instead, choosing to trade lower when he should’ve chosen higher. Actually, there are some traders who try to do this when they think a trend is going to reverse. It’s kind of tricky though so if you’re not too sure of your decision, you shouldn’t do it. In this case, it caused losses for our trader
- Entering the same position at the same price point. This is how it happens. Say that you entered a higher position for a certain price point. The trade doesn’t turn out well, however, and you end up losing money. Annoyed, and thinking that the market was probably just wrong this time, you enter a higher position again. And once again, you end up losing the trade. Trading this way is bound to cause you some losses. Simply put, the only reason why you entered the same position at the same price point was that you got mad that you were wrong the last time. That’s not a good reason to enter any trade. Keep in mind that the market doesn’t care about you or your feelings. The opportunity to earn is equal for everyone, so make sure to use logic and not emotions when trading. Don’t enter a ‘wrong’ position on purpose just because you couldn’t accept that you lost the last trade.
Trading on time frames that are too short
Being able to trade on shorter time frames is one of the best things to trading on the Binomo platform, actually. By trading on short time frames, you’ll be able to earn money faster than usual. However, it does come with one major disadvantage: you have less time to think logically, so you need to be extremely quick on your feet.
If you don’t think you can do this, you probably shouldn’t do 60-second trades. In fact, one of the worst trading mistakes you can commit is to trade on time frames that are too short. That’s because doing so might cause you to trade emotionally instead of rationally. Even though 60-second trades can offer bigger returns, they can also cause huge losses if you’re not careful.
Do you remember what happened to the trader who sent the email? He lost a total of $4000 in 4 separate 60-second trades. Be careful not to let the same thing happen to you.
Have you ever lost money trading, especially on the Binomo platform? What are the worst trading mistakes you’ve done before? Feel free to share them in the comments below!
If you’d like to learn more about how to trade, it’s best to do so through practice! Sign up for a free demo account on Binomo now to jumpstart your trading career and avoid committing these 4 worst trading mistakes!
Good luck on your trading journey with Binomo!