The nature of humans being lazy,
we tend to want to go for the easy way of doing things. And I don't think there is anything wrong with it, provided the easy way and the right way happen to be the same. Hence, providing the rationale for many would-be traders to keep searching for the Holy Grail - the one single method or formula that they can follow step by step to extract riches from the market. What many do not realise that the trading strategies are the simple thing, the hard thing is to keep themselves from straying away or constantly modifying what works; The following are some of the mistakes that many of us tend to make : -
we tend to want to go for the easy way of doing things. And I don't think there is anything wrong with it, provided the easy way and the right way happen to be the same. Hence, providing the rationale for many would-be traders to keep searching for the Holy Grail - the one single method or formula that they can follow step by step to extract riches from the market. What many do not realise that the trading strategies are the simple thing, the hard thing is to keep themselves from straying away or constantly modifying what works; The following are some of the mistakes that many of us tend to make : -
1. Not honoring stops or cut loss points, or constantly re-adjusting our stops to being outside of the original trading plan. This is one of the main mistakes that can cause otherwise profitable systems to becoming loss-making systems
2. Trading aggressively during draw downs with no respect for risk. Every strategy that has been conceived comes with losing trades. It is a part of the game. Understand that our focus should be on risk management first and foremost, without which there are NO consistent profits.
3. Lack of discipline, shifting from the initial trading plan of clearly defined entries and exit signals to personal opinions is detrimental, no matter how good you think your opinions have done in the past.
4. Not following money management rules and trading with too much risk. Many times, one does not realise this unless you are in a bad position.
5. Shifting from strategy to strategy in the middle of trades, or changing a short term trade to a long term trade or vice versa with no proper planning.
6. You have to have confidence in your method of trading. Confidence does not come from big words or the fact that you feel good. Confidence comes from doing homework and research.
7. Trying to get out of a bad loss with a single, big trade is almost always detrimental unless you have a proper plan of action to follow.
3. Lack of discipline, shifting from the initial trading plan of clearly defined entries and exit signals to personal opinions is detrimental, no matter how good you think your opinions have done in the past.
4. Not following money management rules and trading with too much risk. Many times, one does not realise this unless you are in a bad position.
5. Shifting from strategy to strategy in the middle of trades, or changing a short term trade to a long term trade or vice versa with no proper planning.
6. You have to have confidence in your method of trading. Confidence does not come from big words or the fact that you feel good. Confidence comes from doing homework and research.
7. Trying to get out of a bad loss with a single, big trade is almost always detrimental unless you have a proper plan of action to follow.
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