A common mistake many traders make is overleveraging. Some traders think that by opening larger positions, they'll make profits faster. However, large positions can increase stress and the risk of significant losses, ultimately leading to poor decisions that ruin their trading plan. Additionally, trading large positions limits a trader's options, as they must consider the maximum daily loss limit. With each new position, the risk of exceeding this limit increases, forcing them to reduce stop losses or avoid opening other potentially profitable positions. Overleveraging often occurs during "revenge trading," where traders try to recover from losses with a big trade. In such cases, the trader is usually in a poor mental state, making trades outside their strategy, with little chance of success. Even experienced traders, after a series of profitable trades, may feel overconfident and take excessive risks, only to face large losses and violate basic trading objectives
Some traders believe that diversifying by trading multiple instruments reduces risk. However, opening several positions across different pairs might still lead to significant exposure to a single asset. For example, trading multiple pairs involving the US dollar can create an oversized dollar bet. Scaling in or diluting positions can also be risky. Even if the trend seems favorable, constantly increasing positions on the same trade might not be the best strategy. This behavior can be risky, as the trader might not be following solid risk and money management practices. Moreover, opening positions too large can use up the entire margin. Although your account may allow it, this is not a safe practice. Experienced traders know that slippage, price fluctuations, and unexpected market movements can lead to losses. Large positions can increase risk, so it's always better to trade with a conservative approach and control your risk. Even professionals typically risk only 1% of their capital per trade to maintain stability over the long term.
Another form of gambling is opening large positions on a single instrument. This can also include buying into profitable or losing positions in an attempt to reverse market movements. Large positions that exceed reasonable risk limits are pure gambling. Even if the market shows a strong trend, betting everything on one position is risky. Opening a position while at a loss, in an attempt to reverse the market, adds unnecessary stress and can lead to significant losses, leaving the trader in a vulnerable position. Successful traders focus on their strategy, using it consistently and responsibly over time. A trader who risks everything on one market event is betting like someone in a casino, not trading.
A specific issue in prop trading firms is account rolling, where traders buy multiple evaluation courses and pass the verification process for several accounts. However, these traders often take excessive risks, thinking they can start over on a new account if the first one is breached. At TrustPropFund, we encourage a different approach. Our Scaling Plan allows traders to access more funds every few months, and the payout ratio increases significantly. However, excessive account rolling does not align with our goals of testing a trader's consistency and strategy.
Rolling accounts can result in short-term success, but it undermines the purpose of our Evaluation Process, which is designed to assess the robustness of a trader's strategy. We value consistent, accountable trading, not reckless account rolling.
Gambling is risky, and trading can sometimes be wrongly associated with it. Trading is about consistency, strategy, and managing risk for long-term success. If your goal is to get rich quickly, consider other alternatives. At TrustPropFund, we prioritize mental health and promote responsible trading. We believe that real traders are professionals who understand predefined risks and have a long-term edge in the market. If you're in it for the quick win, maybe you should try the lottery
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