Whether you are brand new to trading or you’re a grizzled veteran of the market, at some point you will make at least one of these common trading mistakes in your business. And usually, it’s more than one.
That’s OK, because you are part of a big club and it’s just par for the course. You see, trading involves money, and money makes people do strange things. They zig when they should zag and some even let their emotions completely swallow them up whole.
Mistakes quickly lead to fear. Fear of going broke, fear of a losing trade, and the fear of not being able to trade anymore. These need to be pulled in as quickly as possible. When you can’t rein your emotions in, irrational behavior, induced by all out panic is not far behind. The fewer mistakes you make, the easier your path to trading success will be. That’s why it’s critical that you recognize these common trading mistakes before they get out of control and wipe out your trading business for good.
Here are the top three common trading mistakes that traders make and how you can avoid falling into the same traps.
Common Trading Mistake #1: Not Using Stop Losses
How boring! Another warning to use stop losses! Well, have you listened to the others before this one?
In trading, the only thing you can control is risk. Nothing else is in your power, no matter what indicators you use, what charting platform you subscribe to or how great the trade setup is. You can’t force the market to do what you want, and you can never outsmart the market. The best traders manage one thing - their risk. They understand where it’s time to bail out, and place their stop loss there. The worst traders “give it a little bit of room”.
This isn’t a game of ego. It’s a game of survival. Stop losses are the number one tool to live long and prosper in the market. Use them every time.
Common Trading Mistake #2: Not Having A Trading Plan
If you want to be a trader, or at least act like one, you need to have a solid trading plan before you place your order.
A trading plan more than having a stop loss in place, which we already established as a must have. Proper lot size, profits targets for each trade and money management as well as an exit strategy are all crucial parts of a good solid trading plan.
Yes, if all you had was a stop loss, you could limp your way through without getting too hurt. But aren’t you doing this to get the most out of your trading?
It doesn’t take long to lay out a plan for each trade you take, and it’s well worth doing it.
Common Trading Mistake #3: Searching For The Holy Grail
There is no one indicators or system that will have money shooting out of your monitors.
Many traders have a get rich quick mentality but they forget that the stock market isn’t the lottery, and shouldn’t be treated like it.
You don’t need a complicated methodology to make money trading. You need good strategies, and the tools and discipline to execute them.
Work on developing the patience needed to prosper in your stock trading. Use a tested, proven methodology to base your trades of.
If you need a solid day trading strategy that produces consistent results, then you should check out the RPX Trading System. This system will give you specific entry signals combined with stop losses, which will help you to avoid these common trading mistakes.
You can check it out here: www.rockwelltrading.com/rpx-system.