Finances are easy to grasp for some people, while others need time until they get what’s happening. For the purposes of this article, we will first define what are FTSE and CFD, and then explain the common trading mistakes people often make.
FTSE is short for Financial Times Stock Exchange 100 Index, and you can often find it as FTSE, FTSE 100, FTSE 100 Index, or even Footsie. It shows us the share index of the first 100 companies on the London Stock Exchange.
CFD in finance is known as Contract for Difference and defines the mutual rights and obligations between buyers and sellers. It’s important to note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. Losses may exceed the value of your position. You should consider whether you understand how derivatives work and whether you can afford to take the high risk of losing your money.
So, if these things are clear to you, we can move to the point of this article, which is the common FTSE mistakes and avoiding them.
In the world of investments, mistakes that investors and traders make are called blunders.
There is an unpopular belief that very few active investors are successful in what they do, while many will face serious losses.
First of all, to understand what you need to do, you need to familiarize yourself with the concept of the FTSE, so we recommend that you take a look at brokercomparison.com before engaging in any activity.
This is actually related to the first mistake that many make, which is:
1. You don’t research the market properly and on time
Many traders are guided by their gut feeling and the luck they feel that day. Of course, sometimes this is completely valid because many people know exactly when they feel lucky. However, without researching what this market has to offer in time, you are plunging yourself into something you don’t understand.
Therefore, give yourself enough time to understand all aspects of the FTSE, as well as the elements that are important in trading itself.
2. They don’t know when to stop
CFDs are a risky time for both new and experienced market players. Of course, there are risks in every financial activity, which is why a strategy is needed.
And do you know which strategy is the best of all? As you might guess, it’s self-control, but also knowing when to stop.
Many traders set goals for themselves, but sometimes those goals are really unrealistic.
That is why it is necessary to periodically review your strategy and see what could be improved in each aspect.
3. You don’t have a trading plan
We’ve already mentioned that you should have a strategy, and as part of it, you should have a backup plan. Sometimes things don’t go as planned, but it’s good to stick to your principles.
As with any other sector, the FTSE has good days and bad days. A bad day does not mean that your plan and strategy are not working, because it is not up to you.
Whatever happens, keep a record of every activity. That way, it would be easier to understand what is happening and you could find some pattern in what you are doing.
It is good to understand that many things do not depend on you, whether they are successful or unsuccessful, and so it is with trading. Therefore, stay informed as best you can, so you can make better decisions next time.
4. Emotional and aggressive trading
Revenge trading is the worst decision you could make to recover your losses. Don’t forget that there are no right or wrong ways in trading. But if we can say something that you shouldn’t do, then it would be emotional, aggressive, and revenge trading.
That activity is similar to gambling, in fact when you go all-in and you know that there are only two options – either to win everything or to be left with nothing.
But you yourself know that trading money is not so easy. Instead of reacting with emotion, focus on analyzing your actions. That way, you would understand what you are doing wrong.
5. You try to automate the process
Using software and other trading tools to do the business for you isn’t such a bad idea, as long as you have control over it.
It’s up to you to set the parameters, but you should also know that there are downsides to such systems.
On the one hand, it’s really great that we can rely on algorithms and software in many aspects. On the other hand, you must not forget that there is no human judgment in these activities and that they act the way they are programmed.
Instead of relying on one or the other, our advice is to combine both approaches and see how you can optimize the process.
6. You are trying to build a diversified portfolio
To clarify, there is nothing wrong with a diverse portfolio, but try not to overdo it. Of course, don’t do it in the short term.
For example, pick 2-3 assets to start with and see how it goes. Even when you are an experienced trader, you may overdo it, wanting to build as rich a portfolio as possible.
However, we would advise you to start with one asset and then explore what is happening with the others.
Of course, in the long term, you may have a significant benefit, but you should not overdo it.
Hopefully, some of these tips will help you figure out what you’ve been doing wrong so far.
If you manage to recognize some of your habits, then you are already well on your way to overcoming them or turning them to your advantage.
However, as the main point we would emphasize that before doing anything, you must understand the concepts and elements. Then everything would be much easier. We hope that now you know what to do next, and you will plan the whole thing wisely.