Top Ten Trading Mistakes/Solutions - Mistakes #10, They lack the experience and trading ”time” to develop their disciplines

Last week we covered the ninth topic related to traders that don’t manage their losses financially and emotionally. The management of emotions ties into the last mistake which I call the BIG “D” or discipline.

The mistakes discussed come from the top ten that come up repetitively in my conversations with traders. Mistakes that apply to new traders will be marked will “N” where as all the rest apply to all traders at any trading level but all are important to be aware of.

Mistakes

#1(N) No Financial Preparedness

#2 (N) A Solid Trading Strategy - There is none or too many

#3 - Trading is Easy – early wins

#4 - They neglect to develop a detailed game plan to win

#5 - They neglect to set rules that will keep them safe

#6 - Traders possess patterns on how they dealt with success and failure in the past that now effect there trading today

#7 - They trade with their emotions and NOT their intellect

Mistakes

#8 - (N) They don’t take responsibility for their trading and blame everything else

#9 - Lack Experience Managing Losses, Financially and Emotionally

Note: Mistakes are listed in priority order with the most important being the last.

As a reminder here is the Re-Cap of 1 through 6:

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
Create a detailed game plan to win – Profits, risk rewards, targets, why you are trading, markets, size, rewards, penalties
Create Rules that will protect your cash. Find distinctions that fine-tune a trade. Work to be as precise as you can.
Your, past beliefs, experiences, successes and failures will show up in today’s trading. Just being aware of them helps to keep them in control.
Know when you are trading from an emotion verses your intellect. Work to break the pattern and get help if you can’t.
Take responsibility for your actions
Attack each and every challenge until you find the root and find a solution
If you can’t control what you want to do in your trading than it’s critical you get help to reverse this pattern
Examine a loss as soon as it happens
Stay in emotional control
Set rules that protect your cash

Mistakes #10, They lack the experience and trading ”time” to develop their disciplines

OK, so we are now at the most important topic facing ALL traders at any level from new to seasoned, discipline. Yes the big “D” is what gets to the heart of all trading issues, discipline.

I know you have heard it or read it in ever trading book published a hundred times over that discipline is the one thing every trader MUST master, and well they’re right. Without it, traders’ are lost, unruly, out of control and trading by the seat of their pants.

So let’s take a look at some specific trading challenges and where disciplines can help gain control of the trade.

1) Entering the trade too soon:

This is a combination of the emotion anxiousness and no discipline or set-up criteria for the proper entry. Letting emotions take over your trading will only cost you money and increase emotions.

Discipline: Having specific set-up criteria allows the trader to remove emotions and enter the trade at a specific price point. Entering a trade in the system ahead of time and waiting for it to be filled also allows the mind to stay focused on indicators reactions verses the system entry keys minimizing am emotional reaction.

2) Exiting a trade too soon:

This is also a combo of emotions & discipline. If the fear of entering the trade is in the mind set, the fear of losing could be the catalyst. Lack of disciplined in the exact price to close the trade can be hindered by the emotion of fear that is really driving the trade. It can be so powerful that it will force the trader to close the trade before they should.

Discipline: Placing the stop loss order as well and the profit target order in the system can offer a bit of help here as long and the fear isn’t overriding it all. I have seen traders even sit on their hands so as not to close the trade too soon, before it hits their target. That’s because emotions can be so powerful they physically encourage the trader to close too soon. If you are experiencing this, where you intellect is being controlled by emotional actions over and over then coaching can help as this is the trading “block”.

3) Repeated losses:

One loss after another says immediately the trader is not examining the trade and is going onto the second trade without making a change. A VERY common error, which can cost a lot, increase frustration and led to over trading and can potentially blow-up an account.

Discipline: Examining a losing trade right after it happens is the best way to improve ones trading strategy, set a routine discipline and make money by lowering the win/loss ratio. I have said this many times because it IS the one thing traders can do that has the greatest impact and well worth the effort. Yet it takes the big “D” to do it.

4) Preparedness:

When a trader gets up in the morning and starts up the computers and trading system, the first trade can set the tone for the day and trades that follow. However just jumping into any trade and losing can set the wrong direction.

Discipline: Great traders commonly have the discipline to review the market early, even the night before works well to minimize any over-night stress and can start the next day with a clearer picture. By reviewing the market and indicators ahead of time and getting the feel for the day a trader can have better odds of a great first trade. This takes discipline to set up a morning trading routine.

Some more disciplines to incorporate into your trading

Create some life disciplines that will afford you a great sleep
Create a morning ritual that will have you prepared for the first trade
Spend special attention to the first trade of the day
Be disciplined in examining a loss right after it happens
Stay with the trade – when taking a trade that doesn’t seem to be working and it’s closed, keep the focus on the market to see if you can determine or change the outcome of the next similar trade. Look for a distinction.
Be disciplined in creating your rules that protect your cash
Re-read rules as a morning discipline
Be disciplined in managing cash
Work each trade with the appropriate risk management
Be disciplined in your trading stops
Be disciplined in when you should stop for the day if you are off
Make a list of “must never do’s” in your trading and be disciplined in sticking to them
Be disciplined and trade emotionless
Create and stick you your trading plans

Get help if you need it …..and until next time - Have fun! AND Great Trading!

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