The Dos and Don’ts of Trading: Expert Advice for New Traders

If you are new to trading, it’s essential to learn about the dos and don’ts of trading to make the most out of your investment. Trading can be an excellent way to gain financial independence and control your investments, but it can be a daunting and overwhelming experience, especially for beginners. Therefore, we have compiled a list of expert advice on the dos and don’ts of trading to help new traders get started.

Dos of Trading

  1. Set a Trading Plan

Before you start trading, develop a solid trading plan. It’s best to determine how much you can afford to lose, and create a plan that suits your financial situation. Your trading plan should include specific goals, entry and exit points, and risk-to-reward ratio. The plan must be realistic enough to take into account any unforeseen risks or sudden price fluctuations, but also flexible enough to adapt to market changes.

  1. Trade with a Clear Mind

Trading can be emotional, and it’s easy to become overwhelmed by emotions such as fear, greed, or panic, that are interfering with making rational decisions. Therefore, it is essential to trade with a clear mind, which means leaving your emotions at the door. Before you start trading, ensure that you are in a calm and composed state of mind to make wise decisions.

  1. Start with a Demo Account

If you are new to trading, it is advisable to start with a demo account. A demo account allows traders to try trading without risking real money. It provides the opportunity to familiarize yourself with trading platforms, learn different strategies, and understand how markets work. Once you’ve gained the necessary knowledge and experience, you can gradually start trading with a small investment.

  1. Do Your Research

Before investing in any security, it is important to conduct thorough research on the market, industry, and company. The more you understand a specific company or industry, the better your decisions will be. Keep yourself updated with the latest news and trends in the market to predict the market moves more accurately.

  1. Practice Proper Risk Management

Risk management is an important part of trading. It is essential to have a trading plan in place that outlines your risk levels for each trade. Always place stop-loss orders to limit your losses and set realistic targets for your trades. It is wise to avoid overtrading, and you should always trade within your financial means.

Don’ts of Trading

  1. Don’t Panic

Panic is one of the most dangerous things that traders can experience. In volatile markets, price movements can be swift and unpredictable, and it’s tempting to panic and exit the market. However, panic selling can result in significant losses. Instead, stay calm and stick to your trading plan.

  1. Don’t Overtrade

Overtrading can lead to significant losses. Traders should avoid taking multiple trades simultaneously, as this can lead to poor decision-making and emotional trading. It’s important to focus on quality trades and wait for the right opportunity.

  1. Don’t Follow the Crowd

Following the crowd is a common mistake among new traders. It’s easy to get caught up in the hype and follow the latest trend, but this can be dangerous. Remember that the market moves on supply and demand, and buying at the top or selling at the bottom can result in significant losses.

  1. Don’t Trade Without a Plan

Trading without a plan is an invitation to disaster. It’s essential to have a trading plan that outlines your goals, entry and exit points, and risk levels. A trading plan provides structure and discipline, both of which are essential for successful trading.

  1. Don’t Invest All Your Savings

Trading can be unpredictable, and there are no guarantees that you’ll make a profit. Therefore, it’s important to avoid investing all your savings into trading. You should only invest money that you can afford to lose. As a trader, you must adhere to the adage of investing a maximum of 5% of your capital into one trade.


In conclusion, the dos and don’ts of trading can make a significant difference in your trading experience. Trading is not only about making profits but also about mitigating risks. Therefore, you must have a trading plan in place, manage your risks responsibly, and stay calm and composed throughout the trading process. By following the expert advice discussed above, new traders can gain the best returns by minimizing the potential risks associated with trading.