When starting your own financial market trading business from home, you need to add an extra layer of discipline to your strategy as you’d still need to run the household while working. According to one of the top financial advisors at Jones Mutual, one of the main reasons for home-based market trading business failures can be attributed to mismanagement. With that said, let’s have a look at some of the mistakes financial market traders make when running their business from home as well as how to avoid them.
Trading without a stop loss
If you are working from home, there are a number of chores you need to complete before or after your trading day is over. Keeping that in mind, you won’t be able to sit in front of your computer the entire day to keep an eye on the financial markets. You can choose to receive mobile notifications while you’re not at your workspace but that does not stop you from losing capital. However, with a stop loss, you can put confidence in the fact that should your trade be unprofitable, you won’t lose all the capital in your trading account.
Averaging down your day trades
If you open a trade and you see the market moving against you, you might want to jump to unnecessary lengths to try and save your capital. This is called averaging down and in the long run, will cost you a pretty penny. Averaging down entails opening a trade and when the trade becomes unprofitable, you open another trade to try balance out your losses. This makes your losses bigger, your risk ratio much larger and your profit margin potentially non-existent.
Trying to predict the market from current news events
Since you are running your financial market trading business from home, you’d have the television turned to important news events while preparing for your day of trading. If you try predicting what direction the market will move in based on what you hear on thefinancial news, you are setting yourself up for losing capital. As the financial markets tend to become volatile during news events such as parliamentary speeches, you would be taking a huge risk to trade according to what your gut is telling you. Rather than predicting, make use of the cold-hard facts when deciding whether to open a trade or not.
Failing to do your homework when choosing a broker
A professional financial broker will not just be able to give you expert advice on trading; he or she will also be able to give you some tips on how to manage your financial market trading business finances. However, if you choose the wrong broker, you are heading for the cliff edge. When the time comes to choose a broker, make sure you have done your homework. Do a background check on the brokerage firm, ensure they are legit and they truly value their client’s needs. Some brokerage firms tend to promise their clients a fantastic deal while not living up to their standards. From doing a simple review search of the broker of your choice, you will easily find out if they are truly there to help you or not. After all, you would want a deal tailored to meet your individual needs without you having sleepless nights.
Letting your emotions get in the way
For many traders, the act of trading can become somewhat emotional, especially since your home-based business depends on the funds coming in from what you are doing. What that on your shoulders, it’s quite easy to get emotional and make poor financial decisions. Beware of this and try to steer clear of your emotions getting in the way of you making a trade that could cost you profit. A good way to manage this is giving yourself a breather every now and then. If you feel yourself becoming frustrated, take a break. Put your mind at ease and when you are calm and confident, dive back into making trades with informed and calculated actions.
While keeping the above-mentioned tips on how to avoid costly mistakes when starting a financial market trading business from home in mind, you can trade with confidence and make profit the right way!