magnifying glass on top of document

Common Mistakes that New Candlestick Traders Do

This article discusses the frequent errors that novice candlestick traders often commit. The author maintains that understanding Japanese candlesticks is the most reliable methodology for successful trading.

This post shares The Common Mistakes Beginner Candlestick Traders Make in their trades. From this, you can able to analyse which mistakes you are following.

Analysing Japanese candlesticks is the best and most effective way to be a profitable trader. To do so, you need to learn the basic bullish and bearish candle stick pattern and how it is formed.

Having theoretical knowledge is not only enough to grow In the field of trading. You want to acquire practical knowledge also.

When I was a beginner in the field of candle stick trading, I made many mistakes. This post is sharing the mistakes that I made when I was a beginner in this field. Dont forget to write comment the mistakes you are facing.

This post will help you to understand The Common Mistakes that you are following:

Not Starting with Paper trading

Not starting with paper trading is a common mistake made by beginner candlestick traders. Paper trading is a risk-free way to practice trading strategies and gain experience in the market.

This allows traders to get a feel for the market and learn how to use candlestick patterns without risking real money.

Beginner candlestick traders should spend a significant amount of time paper trading before they start trading with real money. This will help them to develop the skills and knowledge they need to be successful traders.

Once beginners have gained a solid understanding of candlestick trading and have demonstrated consistent profitability in their paper trading account, they can then transition to live trading with real money.

Advantages of paper trading

  • It allows them to practice trading without the fear of losing money.
  • Develop a sense of discipline and patience
  • Overcome the fear of losing money
  • It helps them to learn how to manage their emotions.
  • It gives them a chance to test out different trading strategies.
  • It helps them to identify and avoid common mistakes.
  • Become familiar with the trading platform they plan to use

Trading without confirmation

Candlestick patterns can be helpful indicators of price movement, but they are not always reliable. The market can often move in the opposite direction of a candlestick pattern, so it is important to wait for confirmation before entering a trade.

Entering into a trade without confirmation is similar to catching a falling knife.

There are a number of ways to confirm candlestick patterns. One way is to look for other technical indicators that are also suggesting a reversal such as RSI and stochastics.

By waiting for confirmation, traders can reduce the risk of being whipsawed by the market.

Trading emotionally

Trading is a play of fear and greed. You cannot control these two emotions fully.

A trader who is feeling greedy may hold onto a winning position for too long, hoping to make even more profits. However, if the market reverses, the trader could end up losing all of their gains. Conversely, a trader who is feeling fearful may sell a losing position too early, cutting their losses short. However, if the market then reverses, the trader could miss out on a potential rebound.

A trading plan should include specific rules for entering and exiting trades, as well as for managing risk. By following a trading plan, traders can reduce the chances of making impulsive decisions based on their emotions.

Turning trade into investment

This happens when:

  • A trader sees a stock or other asset moving in their favour and decides to hold onto it for the long term, even if it no longer meets their trading criteria.
  • A trader sees a stock or other asset is not moving in their favour and decides to hold onto it for the long term by thinking that it will move in their favour in future.

To avoid turning trades into investments, it is important to have a clear trading plan and to stick to it. Your trading plan should include your entry and exit criteria, as well as your risk management rules.

Once you have entered a trade, it is important to monitor it closely and to be prepared to exit if it does not meet your expectations.

If you find yourself holding onto a trade for longer than you intended, ask yourself why. Are you still confident in the trade? Or are you simply hoping that the price will eventually come back up? If you are not confident in the trade, it is best to exit it. No matter if you lose money. You can cover the loss in future trades.

Candlestick Trading in low-volume stock

Candlestick pattern psychology is not workable in low-volume stocks. This is because candlestick patterns are based on the idea and the behaviour of large groups of traders can be predicted.

However, in low-volume stocks, the behaviour of a small number of traders can have a significant impact on the price. As a result, candlestick patterns may not be as reliable in low-volume stocks.

Candlestick patterns can still be useful in low-volume stocks, but they should not be relied upon as the sole basis for trading decisions.

Jumping to complex trading

Jumping into complex trading such as futures and options (F&O) is one of the major common mistakes made by beginner candlestick traders from WATCHING VIDEOS on Youtube.

F&O trading is a risky and complex endeavour that requires a deep understanding of the underlying markets, as well as the ability to manage risk effectively. Beginner traders who are not prepared for the challenges of F&O trading can quickly lose money.

If you are a beginner candlestick trader, it is best to avoid F&O trading until you have gained more experience. Instead, start with swing and intraday trading.

Once you have a solid understanding of the basics, you can then begin to explore more complex trading strategies.


Not analyzing the risk-reward ratio (RRR) is a common mistake made by beginner candlestick traders. The RRR is a measure of the potential profit or loss on a trade. It is calculated by dividing the potential profit by the potential loss.

Beginner traders often make the mistake of not analyzing the RRR before entering a trade. This can lead to them taking on too much risk or not making enough profit.

A higher RRR is generally considered to be more favourable. For example, a trade with a 2:1 RRR would mean that the potential profit is twice the potential loss.

By analyzing the RRR before entering a trade, traders can make more informed decisions about whether or not to take the trade.

No Proper Diversification Plan

Diversification is the process of spreading your investments across a variety of assets. This helps to reduce risk by ensuring that you are not reliant on any one asset for your returns.

By diversifying your investments, you can reduce your risk and protect your capital. This is especially important for beginner traders who are still learning the ropes.

For example: If you have $5000 for trade and you are going to trade the $5000 on 5 stocks in different fields in a 1:1:1:1:1 ratio. It is a diversified and more risk-managed method of trading.

In addition to reducing risk, diversification can also help to improve your returns. By trading in a variety of assets, you are more likely to capture the returns of different asset classes. This can help to smooth out your returns and provide you with a more consistent stream of income.

Hooking with the target

The term “hooking with the target” refers to the mistake of entering a trade with a predetermined profit target in mind. This can lead to traders ignoring important market signals and holding onto losing trades for too long.

For example, a trader may enter a trade with a profit target of $100. If the market moves against them, they may be tempted to hold onto the trade in the hope that it will eventually reach their target. However, this can lead to them losing more money than they would have if they had exited the trade earlier.

A better approach is to focus on managing risk and taking profits when they are available. This means setting a stop-loss order to limit your losses if the market moves against you. It also means taking profits when the market is moving in your favor. This will help you to lock in your profits and avoid giving them back to the market.

Premraj MS

Premraj MS

I am Premraj MS a 20 years old web developer, blogger, youtube content creator, stock market analyzer, and most of all a B.Com student from Kerala, India. And also I am the owner of

Articles: 5

Leave a Reply

Your email address will not be published. Required fields are marked *

Discover more from Marketnasium

Subscribe now to keep reading and get access to the full archive.

Continue reading