General Trading Mistakes
1. Changing your trading strategy after 5 losing trades in a row
Losing is unavoidable, and even the best traders will regularly realize losses. Changing your approach after a few losing trades sets you back on the learning curve. Stick to your approach; every losing streak will end.
2. Not expecting the unexcepted
A sudden market collapse, an unexcepted news release, or the loss of your internet connection can happen at any time. Be prepared by having a fixed stop loss in place. If a single trade can wipe out your trading account, you have not done your homework as a trader.
3. Not keeping track of your relevant news releases-denying the importance of news
Even if you are a purely technical trader, you do not have to trade the news, but you have to be aware of them at any point in time.
4. Not being prepared
Do you fire up your computer, start your trading software and dive into the charts? Just like a plane pilot doesn't ask his co-pilot after the take-off where they are heading, a trader needs to have a detailed trading plan for the upcoming trading session.
6. Not using a trading journal
One of the surest signs that you do not have a future as a trader is when you do not have a trading journal and claim that you do not need one.
7. Not fully learning one method
The consistent losing retail trader jumps from one method, hoping to stumble over the Holy Grail. You have to accept that there is no superior trading method and that it comes down to your abilities to make a trading strategy work.
8. Failing to adapt to changing markets
Once you find a way to make money trading consistently, the work does not end. Financial markets are ever-changing and evolving organisms. If you fail to adapt to changing market conditions, you will be out of business shortly after.
9. Letting hindsight influence your trading
Amateur traders watch a trade after exiting it and beat themselves up if they have entered too early. Other times they try to find reasons why a trade was a loser to change their whole trading approach on the spot. The professional trader collects data and makes educated trading decisions based on a large enough sample size.
10. Not understanding the difference between long term and short term perspective
Over the short term, anything can happen. You cannot control the outcome of your trades, and you can certainly not predict the outcomes of your next two, three, or even ten trades. But over the long term, that doesn't even matter. If you have a trading strategy that has a positive expectancy and follows it religiously, the only possible outcome is making money.
11. A smaller stop loss means less risk
The distance of your stop loss has no relation to the potential risk of your trade. Risk is measured in a potential loss of your trading account. You have to set the distance about taking profit distance and the trade size to get an idea of potential risk.
12. Adding to losing position
This is a big no-no! Learn to take losses because they are normal. Trying to delay the realization of losses is the death sentence for your trading account.
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