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“Trading Mistakes
to Avoid
Prepare-Strategy
Trading is Easy”
By Robin Dayne
There is a large list of trading mistakes that
could be discussed but let's discuss a few at a time. I will
stick to the ones that come up most.
Some mistakes apply to new traders at all levels.
If you haven’t gone through them GREAT I hope you never
do ……but this will at least give you “awareness”
and some solutions on how to fix them.
Important: Always work your trading challenges
through to solutions!
Be Financial Prepared
Many who choose to go into trading, make the mistake of neglecting
to calculate what it will financially take to make it through
the learning curve. So when they go to trade and they start
to work a strategy over and over many times they will put
their money on the line and lose more than they make. Money
has a tendency to slip away very quickly with this method.
Not to mention the emotional toll it will take on ones confidence.
In the beginning losing trades can really eat
up your cash quickly and there is so much to learn. As a matter
of fact, you will never know all there is to learn, in your
lifetime, about trading and the markets. There are different
markets to trade and just when you think you’ve got
it the environment changes and all original bets are off and
you have to start all over again.
Solution
When you are just starting out, be sure to make a specific
plan for your trading cash and “living cash”.
That’s the cash you will need to live on that will cover
your expenses. How you manage cash in general will be important
and how you manage it while trading can mean the difference
between success and failure.
Set rules for how much you can lose in a day,
remembering losing IS part of this game. Never lose an amount
that makes you upset or that you can’t recoup in ONE
day, otherwise you will always feel like you are digging yourself
out of a hole never moving forward.
“Maximize the profits and minimize the
losses” is a quote made popular by successful traders
with good reason…..heed it!
Note: The results of your success will be determined
by how well you manage your losses than the wins. I know this
sounds like it’s in confusing but it is the truth.
Have a Solid Trading Strategy - There
is none or too many
This is when a traders goes to a 3 hour seminar
gets sold on how easy trading is an how much money they can
make, take the families retirement saving and loses it on
“the system”.
Again emotions and greed can kick in with the
possibility to make cash easily. This is a place where caution
is critical. There is nothing wrong with a system and knowing
these types of systems tend to have a cycle because they work
under certain market conditions.
No if you think this is “bunk” than
think back and can you remember any system that was aggressively
marketed 10 years ago that is still being marketed today?
If they are still alive than maybe it is a worthwhile system
to look at. Most are designed with current market conditions
and most will lose their strength when things change. So please
be aware of what you are buying and doing.
Another error with strategies is having several
strategies and mixing them together with none working. The
lack of focus fosters the inability to fine tune a good strategy
and perfect it.
However, I will also say that trading is an
amazing business where, when you plan and work the strategy
you can do very nicely for your self, your family and also
help your community and others. This is a good thing!
Don’t mix strategies especially when you’re
new to trading.
Solution
Pick a strategy you like and a market to trade in. Stay focused
and fine tune each time you trade until you have the winning
combination of 85% or better.
Remember each strategy changes with each market
and will most likely change over time.
Focus, focus, and oh yes focus. This is your
best plan of attack to successful trades.
Look for anomalies in your statistics as well
like the time of day of winners and losers even the day of
the week. When things work and don’t work. Become a
“digger” and find a way to make the trade work.
Trading is Easy
There are two main things that contribute to the feeling of
“easy”. First if you go to one of these big free
seminars that show software that has easy signals of buy here
and get out and sell there.
They show you how it works and of course when
you get it home for some reason you can’t seem to make
the money that the instructors made in the seminar.
Or worse yet you make some money easily and
say “Wow this is a piece of cake and now I can make
a fortune easily!”
Now the trader with a false security starts
to increase the size of their trades and when the losing streak
begins it can be violent and fast.
Bottom- line trading is NOT easy! It takes work
and caution, I compare it to learning and winning in a formula
one car. Would you get in the car having gone around the track
one time and enter the race with the expectation you were
going to win the first time out? Of course not! So why would
you think anything different with trading? It’s that
intense and so much to learn. It’s Ok to get excited
just be realistic and decide you are going to learn as much
as possible.
Have fun creating your own system.
Solution
I don’t mean to burst your bubble but trading is NOT
easy or at least not as easy as some paint it to be.
It takes work and time in the market to learn
the environment. So setting up a plan to learn is a good thing.
Studying each day and setting time aside to learn the components
of your trade be it technical, fundamentals, and strategies
can move you forward very quickly.
Writing down (3) new things you learned each
day and re-reading this list each day before you trade can
speed up things as well.
Re-Cap:
• Have a plan for how your money is spent in your trading
day and life
• Set up rules to stick to the plan
• Minimize your losses and manage them
• Focus on one strategy till it’s mastered
• Become a “digger” and fine tune each trade
• Trading is what you make it, have fun and learn
• Be a learning sponge
• Be flexible and change with the markets
In the mean time Great Trading!
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