We all make mistakes but what’s most important is to correct them at the earliest opportunity and learn from them.
- NOT UNDERSTANDING TRADING AS A BUSINESS
Most of us treat trading just like a hobby~ When it’s not or maybe even if it is, it’s a pretty expensive one.
We can acquire knowledge acquire experience but the lack of professional business approach doesn’t make it last long.
- TREATING TRADING LIKE A GET-RICH-SCHEME
Trading requires skill that takes time to learn. It’s not like winning lottery or inheriting money.
There are no shortcuts to it.
By consistent hard work and practice; Find a method that you know inside and out & execute objectively.
- PRESSURE OF SETTING FINANCIAL GOALS IN A TRADE
Being a trader comes in with a lot of self-awareness.
Until we know ourselves, we can’t really strive to make a specific amount.
Or we’ll fall into traps & lose it all.
Have patience, discipline & know what works for you.
- POSITION SIZING & SL
This is where we open big trades each time.
While it could make a lot of money, it also exposes us to heavy losses.
Having a mental SL is the worst thing we do to ourselves & let our a/c bleed.
Avoid leaving trades unprotected. Trade what you see.
- NOT KEEPING A RECORD
Success doesn’t come in without practicing, planning or evaluating your trades & psychology that follows.
We tend to skip journaling not realizing the fact~ it helps to track our progress & learn from the mistakes we made when entering/exiting a trade.
- AVERAGING ON LOSERS
We have a tendency to not only hold on to our losses but we try to bring down the cost price by averaging the losers.
In the hope of squaring off at break-even we collect and hold all such stocks that we never thought we’d invest in.
Ride your Winners.
- FOMO
Emotions are a key driving force behind FOMO.
It stems from the feeling that other traders are more successful.
It causes high expectations, lack of perspective, overconfidence/little confidence & an unwillingness to wait.
Be aware of the triggers and drive it out.
- SCALING UP TOO FAST
The rule is~ Never scale up based on a one-off scenario.
Once we get early success we try to become rich quickly & embrace too much of leverage.
Initially, We got lucky or maybe just gained false confidence. What now?
Have a plan rather than hot moves.
- ABANDONING STRATEGIES QUICKLY
Trading psychology or an unreliable process is why we quit our strategies too fast.
Furiously shifting from one strategy to another will only make the returns worse.
Let the strategy/system develop & monitor the results before making decisions.
- APPLYING WHAT HAPPENED YESTERDAY TODAY
The market is usually a dynamic place where things change regularly.
The sooner we understand it~ the better.
You can avoid this by looking the market & at what it indicates rather than basing out your choices out of no where.
In the end, Just like a child doesn’t learn to ride a bike without taking a few falls. No trader is perfect. The key to successful trading is:
~To identify & stick to an effective trading strategy/system.
~Never underestimate the market.
~Keep a detailed journal.
~Learn constantly.