Day Trading Mistakes
Day Trading Mistakes doom a trader, novice and veteran alike. This remains true for other types of trading also. One mistake can take away profits of several trading days, if not take you away completely from trading itself.
You might wonder to know that traders keep making the same mistakes again and again. That is the reason why I say that your biggest challenge to become a successful trader is YOURSELF.
Mastering your discipline and mastering your emotions, go a long way in your trading career.
So what are those trading mistakes?
I have listed a few common mistakes which I have committed and suffered or I have seen many traders loose money because of these mistakes.
1. Trading with out learningNever trade with our first learning. People are ready to put in three years of life to get a degree and become unemployed. They are not ready to put in one or two years to learn stock trading to make money. I urge you to spend time studying chart patterns and candlestick patterns. Master one strategy. Keep making money while you learn other strategies.
2. Over TradingNever over trade. Know your limitations. Understand money management. Adopt it. Stick to it. Never use money which you cannot afford to loose. Never borrow and trade. Always keep your risk to less than 2% and risk to reward ratio more than 1:2. If you are financially under pressure you tend to make more mistakes.
3. Trading with out Stop LossThis is the most common day trading mistake. Never trade with out Stop Loss. The moment you enter market and create your trading position, The first most important step to follow is to place a Stop Loss Order. This along with money management can protect your money in the long run. Never cancel a stop loss order or move it in the direction of loss. Either move it towards your profit side or convert it to square off the trade.
4. Day Trading with divided attentionNever day trade along with one more job. Day trading is a full time job. It is demanding. It requires undivided attention. It does not like people giving half attention. The prices can stay at place for a very long period and bore you. Then suddenly it can move in either direction with high momentum. In less than a minute it can reach your target or eat away your profit and go into loss. If you are not attentive with full time commitment you cannot succeed in day trading.
5. Trading when you are emotionally upsetDo not trade when you are sick or emotionally down. Your bad mood can kill your good trades. At the same time be careful when you are elated. Your previous continuous three successful trades can push you to relax your trading rules. It will make you to consider that stop loss may not be necessary. Learn to keep all your emotions out of the trading ring. Practice mechanical trading.
Is this all to the list of day trading mistakes?
No. There are many more.
- Not writing down your trading plan and actions taken during your trading session.
- Not keeping your your broker's contact details.
- Not keeping an alternate internet connection.
- Listening to others advice and changing your trading plan.
- Placing GTC orders and forgetting.
- Averaging the losses.
- Trying to catch market tops and bottoms.
- Trying to day trade illiquid stocks.
- Trying to be in the market all the time.
- Trying to tweak a successful strategy as per ones whims and fancy.
- Creating a mental strategy and putting money on it, with out back testing and paper trading.
With more and more experience your list of day trading mistakes keep growing. It is a good sign. Keep mastering each mistake. You will end up as a successful trader.
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