The Top 5 Challenges Faced by New Traders and How to Get Ahead of Them!

The Top 5 Challenges Faced by New Traders and How to Get Ahead of Them!

Becoming a successful trader can be an exciting and profitable journey, but the reality is that there are common challenges that sometimes pop up as you’re learning the ropes. The good news is that with the right support, knowledge and basics in place, you’re able to prepare for and overcome these challenges as you trade your way to success.

We’ve put together this quick guide to give you a heads up on what these challenges are and to empower you with insights into how to prepare for and overcome them!

Challenge 1: You Don’t Know What You Don’t Know

One of the most common challenges for new traders is the lack of sufficient knowledge and education about the financial markets. Trading involves complex concepts, technical analysis, and understanding various financial markets.

Potential solutions from our pro’s:
• Invest time in learning the basics of trading, including fundamental and technical analysis, risk management, and trading strategies. There are loads of online courses, books, and resources available to help you get started.

• Most trading platforms offer demo accounts where you can trade with virtual money. This allows you to practice without risking your real capital, gaining valuable experience at the same time.

• Look for a trustworthy mentor or follow experienced traders on social media and trading forums to gain insights and learn from their experiences.



Challenge 2: Practicing Emotional Control in the Face of Tough Trading Moments

Emotions can work for or against any trader, no matter how experienced. It’s natural to feel emotions like fear, greed and overconfidence, but remember that if left unchecked, these feelings can lead to impulsive decisions.

Potential solutions from our pro’s:
• Create a clear and detailed trading plan that includes entry and exit strategies, risk management rules, and clear goals. Do your utmost to stick to this plan even when your emotions run high.

• Implement stop-loss orders to limit any potential losses. This ensures that you don't let emotions dictate your trading decisions, and gives you valuable peace of mind.

• This one takes a lot of practice, but try to be aware of your emotions while trading. If you feel overwhelmed, take a break from trading to calm your nerves and refocus.



Challenge 3: Getting to Grips with Good Risk Management

A solid risk management strategy is a critical part of successful trading. New traders often risk too much of their capital on a single trade, which can lead to significant losses.

Potential solutions from our pro’s:

• Determine how much of your trading capital you are willing to risk on each trade and set strict limits for yourself. A common rule of thumb is to risk no more than 1-2% of your total capital on a single trade.

• Don't put all your capital into one asset. Diversify your investments across different types of markets or assets to spread risk.

• Calculate your position size based on your risk tolerance, stop-loss level, and trade size. This ensures that you're not risking more than you can afford to lose.



Challenge 4: Overtrading

New traders often make the mistake of overtrading, thinking that more trades lead to more profits. The reality is that excessive trading can result in higher transaction costs and increased exposure to risk.

Potential solutions from our pro’s:

• Stick to making trades that align with your strategy and criteria. Avoid impulsive trades driven by emotions or boredom.

• Set daily or weekly trading limits for yourself. Once you reach your limit, stop trading for the day or week.

• Keep a trading journal (in a real-life notebook or on your mobile phone) to track your trades and analyse your performance. This helps you identify any patterns of overtrading, and can guide you as to how to tweak your trading strategy.



Challenge 5: Losing Patience for Earning Profits

Ultimately, trading is not a shortcut to instant wealth. It calls on you to practice patience and discipline, and newer traders often become impatient when they don't see immediate results.

Potential solutions from our pro’s:

• Ensure that your expectations are realistic and understand that trading is a long-term journey. It may take some time to achieve consistent profits.

• Trust your trading plan and give your strategy time to work its magic. Avoid constantly changing strategies or jumping from one asset to another. This will give you a clear idea of what works for you, and what doesn’t.

• Instead of getting discouraged by any losses you may experience, choose to adopt a healthier perspective. Every loss is an opportunity to learn and improve your trading skills. Pour your energy into analysing what went wrong and assessing which adjustments to make.



We hope that we’ve helped to ease your mind and point you in the direction of preparing yourself for a successful trading journey. Trading is a skill that takes time to develop, so be patient and persistent as you work towards becoming a consistently profitable trader!