Trading is difficult enough without a simple mistake taking away all your hard won profits. Here are a few ideas that could save you thousands by avoiding silly mistakes.
Is it Buy, Or Sell
One of the first mistakes that is very common is pushing the buy button when you meant to sell or the sell button when you meant to buy. This often happens when exiting a position especially if you are trading both long and short. Instead of exiting the position you end up with a position size twice what you started with.
It is easy to catch this mistake by making a habit of looking at your open positions immediately after placing the trade. If you find that you have made this mistake it is easily rectified at low cost if you act now. Not realising that you have an open position could be a very costly exercise.
Forgotten Stops
If you exit an order when you are watching the screen, make sure you remember your stop orders. Assuming you have placed a stop on the trade, which you always should, then you must cancel the order if you exit before the stop is triggered. Forgetting your stops is a risky exercise and if the stop is triggered it could be hours before you know that the order was traded. The market may move in your favour, but it is not something I would like to gamble on.
Before exiting the trading platform at the end of a trading session make sure you check your open positions match your stop loss orders to avoid any surprises when you next enter your trading platform.
Was That $10000 or $100000
While it is possible to get the maths wrong when calculating your position size it is far more common to get the number of zeros wrong when you place the trade. An extra zero means your risk increases by a factor of 10 times and forgetting a zero reduces your profits to 1/10th.
Checking your open position after the order is placed should enable you to pick up this error as the size of the position will be very different to your normal trading size.
Avoid Placing Your Stops Too Tight
To avoid losing money many traders will reason that a tight stop will protect them, but placing a stop loss too tight can result in the trader being exited prematurely from the trade. The trader has created exactly what they wished to avoid.
Stop placement is a critical piece of your trading puzzle. The stop should be placed outside of the normal fluctuations of the share and at a place where your trade idea will be clearly proved incorrect.
Follow The Rules
Even experienced traders can be caught out by chasing a share as it moves rapidly. While it is more common amongst people new to trading it still can catch out the more experienced traders. Following this strategy is usually a recipe for disaster and also can be one of the hardest mistakes to overcome.
There are a huge range of opportunities that you can trade, more than you would have capital to follow and there are always other trades waiting around the corner. Ensure you follow your strategy and stick to your trading plan. This can help you avoid chasing trades which can be an expensive exercise.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability. - 23309
Is it Buy, Or Sell
One of the first mistakes that is very common is pushing the buy button when you meant to sell or the sell button when you meant to buy. This often happens when exiting a position especially if you are trading both long and short. Instead of exiting the position you end up with a position size twice what you started with.
It is easy to catch this mistake by making a habit of looking at your open positions immediately after placing the trade. If you find that you have made this mistake it is easily rectified at low cost if you act now. Not realising that you have an open position could be a very costly exercise.
Forgotten Stops
If you exit an order when you are watching the screen, make sure you remember your stop orders. Assuming you have placed a stop on the trade, which you always should, then you must cancel the order if you exit before the stop is triggered. Forgetting your stops is a risky exercise and if the stop is triggered it could be hours before you know that the order was traded. The market may move in your favour, but it is not something I would like to gamble on.
Before exiting the trading platform at the end of a trading session make sure you check your open positions match your stop loss orders to avoid any surprises when you next enter your trading platform.
Was That $10000 or $100000
While it is possible to get the maths wrong when calculating your position size it is far more common to get the number of zeros wrong when you place the trade. An extra zero means your risk increases by a factor of 10 times and forgetting a zero reduces your profits to 1/10th.
Checking your open position after the order is placed should enable you to pick up this error as the size of the position will be very different to your normal trading size.
Avoid Placing Your Stops Too Tight
To avoid losing money many traders will reason that a tight stop will protect them, but placing a stop loss too tight can result in the trader being exited prematurely from the trade. The trader has created exactly what they wished to avoid.
Stop placement is a critical piece of your trading puzzle. The stop should be placed outside of the normal fluctuations of the share and at a place where your trade idea will be clearly proved incorrect.
Follow The Rules
Even experienced traders can be caught out by chasing a share as it moves rapidly. While it is more common amongst people new to trading it still can catch out the more experienced traders. Following this strategy is usually a recipe for disaster and also can be one of the hardest mistakes to overcome.
There are a huge range of opportunities that you can trade, more than you would have capital to follow and there are always other trades waiting around the corner. Ensure you follow your strategy and stick to your trading plan. This can help you avoid chasing trades which can be an expensive exercise.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability. - 23309
About the Author:
Jeff Cartridge is the author of Supercharge Your Trading with CFDs and co-created the website LearnCFDs.com Learn the Foundation of Successful Trading CFD Trading Strategy
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