Common Trading Mistakes
Many traders trade without a trading plan. They have no accurate risk and profit objectives before placing a trade.
Or they may have a plan but they don’t follow it, they simply move away from their plan, letting losses run and profits turn into smaller profits and losses.
They make the mistake of closing out their good trades and hold their bad trades in hope.
Once a trader has a few winning trades he tends to become overconfident and starts guessing his trades, leaving his trading plan and research, placing his winnings on one trade
Having no financial trading plan, traders tend to over trade their account size, small account large trade
Greed takes many forms, you may be just flicking through markets and suddenly start day trading, trying to scalp the market, having several losses, this was not part of your original trading plan.
Fail to use stops, adding to a losing position.
Fail to use predefined risk %
Always trading the same direction
New traders, trade emotionally
Looking a the market in too short a time frame.
Unwilling to take a loss
Overtrading.
You need to stick with your trading plan, if it states you are required to take a small loss then take the small loss, don’t be undisciplined and let that loss grow until it hurts. Trade the plan.
If your technical analysis is telling you that the market has turned against you, then exit the market, don’t hold onto fundamental analysis, both have to be right.
Cardinal rule: "Cut losses short. Let profits run."
Plan your trade and trade your plan, use your rational mind not your feelings.
Most new traders have trouble with timing their trade and don’t have enough capital to make it through the smaller market retracements. Get your risk % right. Less is More.
Traders need to understand the difference between small price fluctuation and a fundamental change in the market.
If your not disciplined and don’t follow your trading plan, this can lead to large losses and small profits, define your defensive plan before opening a position
It is the emotional attachment to a position that will cause you to create large losers. You need to train yourself to keep loss small and practice holding winners for large wins.
If your under capitalized one reasonable move could wipe you out.
Overtrading and greed is simply a lack of discipline, that causes loss.
Too many trades on at once.
Trying to trade inactive markets is dangerous.
The risk is too large for a small profit, leads to loss.
Traders lose money because, the loss is not in proportion to account size
Lack of discipline is a major shortcoming.
Lack of discipline also includes results in attachment – holding on to losers, anger – woulda couda shoulda, ego – trying to beat the market and accepting a loss quickly
Large accounts are no guarantee of success
Trading against the trend and not using stop loss orders.
Insufficient capital to trade with.
Improper money management are major causes of large losses
Do not over-trade your accounts size, plan your trades risk
Inability to ride winning trades, new traders tend to take small profits and miss out on large profits
Some traders are on an ego trip and won't take advice from another person; any trade must be their idea.
Many traders cut their winners too soon and cut their losses too late
Traders that have no discipline have no plan, they over trade, no patience in waiting for correct set-up for entry and tend be anxious and exit profits to early.
Traders using their intuition may cause them to hold losing trades, thinking its only temporary
Under capitalized, a small account limits diversification and power for staying in the market
Trying to pick tops or bottoms, is a common occurrence and a error .
No trading plan, no money management, equals emotional trading.
Not understanding the local sector and the global sector of the stock they are trading
Forgetting to use stop loss order
Trading against the trend
Lack of self discipline
Jumping in the market based off some news in the paper, the news may already be factored into the market.
Inadequate research
Not identifying clear risk parameters and executing them. Stops and (GLSO)
Not enough research, too many trades at once, then dabbling day trading, then this and that, they under mind themselves
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