Scams and the biggest beginner mistakes
Signal sellers, fake screenshots, pump groups, and the habits that blow up accounts.
Two dangers
New traders usually lose money fast in one of two ways: someone else tricks them, or they trick themselves. Let's cover both.
Part 1: scams
Signal sellers
A charges money, often every month, to tell you when to buy and sell. Ask yourself: if someone really had signals that made lots of money, why sell them to strangers for $50 a month instead of just trading them? Some signal sellers even earn money from brokers when their followers sign up and trade, whether those followers win or lose.
Fake screenshots
A screenshot of a giant winning trade proves nothing. It can be faked in a minute, come from a demo account, or be the one winner out of fifty losers. That's on purpose. Real results need the full list of trades, losers included, over a long time.
"Guaranteed" returns
Nobody can guarantee returns in trading. Nobody. If anyone says "guaranteed 10% a month" or "no risk," walk away. And 10% a month isn't small: it would more than triple your money in a year, which almost nobody does for long. Some of these schemes are a : they pay old members with new members' money until the new money runs out and it collapses.
Pump groups
A is when a group hypes a small stock or coin ("it's going to the moon!") so lots of people buy and push the price up. The people who started it bought early, and they sell to everyone who rushed in. Then the price crashes. If you heard about it in a chat group or a hype video, you're probably the one being sold to. In many countries, running a pump and dump is illegal.
Other red flags
- Pressure to hurry: "only 3 spots left!"
- Fancy cars and piles of cash in every post, but no real trading record.
- Asking you to send money or crypto to a person, or to share your account password.
Part 2: the biggest beginner mistakes
Revenge trading
is jumping right back in after a loss to "win it back." You're upset, you skip your setup, you often trade bigger, and one loss turns into three. The fix is your daily loss limit. Hit it, close the screen, go outside.
No stop
Trading without a feels fine, right up until the day the market keeps going against you. One trade with no stop can erase months of careful wins. Every trade gets a stop, placed the moment you enter.
Too much size
Even a great strategy has losing streaks. If each trade risks 10% of your account, five losses in a row (which happens to everyone) takes away about 41% of your account. At 1% per trade, the same streak costs about 5%. Size decides whether you survive a bad week.
The rest of the list
- Trading without a written plan.
- Switching strategies after every loss.
- Trading during big news by accident.
- Trading money you need for rent, food or school, or money you borrowed. Only trade money you could lose without it hurting your life.
Remember
- "Guaranteed" returns, paid signals without a full record and winning screenshots are red flags.
- Pump groups make money by selling to the people who join late.
- Revenge trading, no stop and too much size are how most accounts blow up.
- Only trade money you can afford to lose, with a stop and small size on every trade.
Check yourself
1. Someone online promises 'guaranteed 10% a month, no risk.' What is that most likely?
2. In a pump and dump, who usually loses money?
3. You just lost a trade and feel angry. You want to jump right back in to win it back. What is this called?
4. You risk 10% per trade and lose 5 in a row. About how much of your account is gone?
You finished the written lessons in Orchard. Back to all levels
Money Tree School is education, not financial advice. Examples use made-up or historical numbers to show how things work; they are not recommendations to buy or sell anything. Markets can lose money.