Top 10 trading mistakes
Like it or not, the path to becoming a profitable trader is rarely a direct one. Here are my top 10 trading mistakes and how to avoid them.
1. No trading plan in place before a trade is placed
A goal without a plan is just a wish. Having no clear plan of action for entering and exiting trades is the perfect recipe for crash and burn.
2. Expectations too high, too soon
Can you become a successful doctor, lawyer or businessman overnight? Rather unlikely. It takes hard work and persistence. It’s the same with trading. Before dreaming of becoming a profitable full-time trader, focus on becoming a profitable part-time trader.
3. No protective stops
Law of statistics: no matter how good your trading strategy is, you don’t know whether the next trade will be a winner or a loser. Make sure you use a Stop Loss.
It takes focus and concentration to become a successful trader. Having too many irons in the fire can and will turn against you.
5. Losing the big picture perspective
Are you a day trader working on 15-minute or 5-minute charts? Try getting into the habit of checking longer-term charts to avoid missing the forest for the trees.
6. (Too) risky money management
It doesn’t take a fortune to start trading. But without a calculated money management strategy in place, you can lose a fortune. Risk wisely.
7. Lack of patience
Do you ever find yourself trading for the sake of trading or just because you haven’t traded for a while? Not a good starting point for successful trading, I’m afraid. Simply wait for your trading set-ups to appear and act upon them.
8. Riding losing positions too long
Successful traders don’t sit on a losing position very long. Is your set-up not validated? Survival tactic number one: take a small loss and move on to the next potential trade.
9. Trading against the trend
Novice traders often start off hoping to always buy low and sell high. Unfortunately, that’s not a proven way to make a profit in trading. If you want to think outside of the box, make sure you know how things work inside the box first.
10. Failure to accept responsibility for your own mistakes
The market is not against you. Neither is it your broker’s fault. If you feel that you are not in full control of your trading, it’s time to re-evaluate your strategy.
Enjoy trading everybody!
Published: 9 July 2014
You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is not investment advice. The information provided is believed to be accurate at the date the information is produced.