Biggest Trading Mistakes.

Dear Trader,

What do you think which is the most important mistake in trading that we should avoid among these.

1. Trading with money you can't afford to lose
2. The need to be "certain"
3. Words that will kill you! HOPE---WISH---PRAY
4. Not Acting on your plan
5. Not knowing how to get out of a losing trade
6. Having an ego
7. Falling in love with a sector or script

Regards
Mark

6 by a country mile.

That's what leads people to continually try and pick turning points in heavily trending markets for example.

The market is so much bigger than you. It's an ocean, you're a dinghy, and there are supertankers about. Be humble, be nimble, and when there's a windshield heading your way try not to be the fly.

Not being honest with yourself while demo/paper trading

mark004 said:

Dear Trader,

What do you think which is the most important mistake in trading that we should avoid among these.

1. Trading with money you can't afford to lose
2. The need to be "certain"
3. Words that will kill you! HOPE---WISH---PRAY
4. Not Acting on your plan
5. Not knowing how to get out of a losing trade
6. Having an ego
7. Falling in love with a sector or script

Regards
Mark

Click to expand...

Yes

No 6

GammaJammer said:

6 by a country mile.

That's what leads people to continually try and pick turning points in heavily trending markets for example.

The market is so much bigger than you. It's an ocean, you're a dinghy, and there are supertankers about. Be humble, be nimble, and when there's a windshield heading your way try not to be the fly.

Click to expand...

"To the ego, the present moment hardly exists. Only past and future are considered important. This total reversal of the truth accounts for the fact that in the ego mode the mind is so dysfunctional. It is always concerned with keeping the past alive, because without it - who are you? It constantly projects itself into the future to ensure its continued survival and to seek some kind of fulfillment or release there. It says 'One day, when this, that or the other happens, I am going to be okay, happy, at peace'. Even when the ego seems to be concerned with the present, it is not the present that it sees: It misperceives it completely because it looks at it through the eyes of the past. Or it reduces the present to a means to an end, an end that always lies in the mind-projected future. Observe your mind and you'll see that this is how it works.

The present moment holds the key to liberation. But you cannot find the present moment as long as you ARE your mind"

Eckhart Tolle"

Biggest mistake in trading

IN trading, it is alright to have an ego, because it will keep you going and going.

It is also okay to trade money you can't afford to lose, because only in the end will you discern that you can or cannot afford to lose the money you have traded.

Not acting on your plan is bearable. AT least you had a plan.

Not knowing how to get out of a losing trade is natural. You can resolve it easily.

Falling in love with a sector or script is also normal.

The biggest mistake indeed is No. 3: Words that will kill you – Hope, wish, pray. Because these are all useless without hardwork.

I'll take 2

Try this little gadget - problems solved.

Stopping the Next Crisis ? With a Bracelet - General * Europe * News * Story - CNBC.com


Stopping the Next Crisis — With a Bracelet
Published: Thursday, 15 Oct 2009 | 5:52 AM ET
Text Size
By: Robin Knight
CNBC Assistant Web Producer

You're just about to make that big trade, you're sure it's going to win big, your heart is pumping and everything is saying "buy." But then the red lights start flashing — from your bracelet.

Analysts say that many risky trades could be avoided if only traders were not letting their emotions get the better of them, so Royal Philips Electronics and ABN Amro have teamed up to find a solution. Their answer is a flashing bracelet and natty-looking bowl that detects emotion.

The "Rationalizer" consists of an "EmoBracelet" that measures the "arousal component of the user’s emotion through a galvanic skin response sensor," and an "EmoBowl."

The higher the trader's arousal level, the more intense the lights on the bracelet and bowl become. When they get really worked up, the color shifts all the way from a yellow to a deep, warning red.

When the red lights flash, it could be time to take a walk, or at least think twice before making that trade, the companies said. Whether a big flashing bracelet could add to the tension or not is yet to be seen, however.

Philips and ABN Amro started work on the system before the collapse of Lehman Brothers and is aiming it at "serious home investors."

"Research shows that home investors do not act purely rationally. Their behavior is influenced by emotions, most notably fear and greed, which can compromise their ability to take an objective, factual stance," the companies said in a statement.

Experts are divided on whether emotions play a good or bad role in trading.

"It's an interesting idea, but I don't think it's going to be very useful," Louis Gagnon, a professor of finance at Queen's University, told the Financial Post.

"Emotion is central to the marketplace," he added.

I think another big one is trading with too much size.

Many people, especially those new to the game want to make 100%, 200% maybe even more per year. But to do that you've (normally always) got to take on a lot of risk. And a lot of risk means large losses if you get the trade or trades wrong.

So my advice for those starting out is to trade really small and understand that a 15% - 30% annual return (aith associated low risk) is a great result.

And that's what it boils down to -

Risk-adjusted returns.

So it's not so much a case of how much you make, rather how much was risked to make that amount. A trader that makes a return of 20% a year with a small risk is usually far smarter than one that makes in excess of 100% with lots of risk.

Sadly, many people will only look at the money and always think the guy who makes the most is the best.

biggest mistake in trading is incorporating emotion when making your trade decision.


emotion includes :

- not willing to let it go
- not staying neutral
- previous feeling of winning
- previous feeling of losing
- anger
- greed
- wants to become rich
- unsatisfactory mind
- keeps remembering/predicting which way market will go in your thinking
- i can conquer the market
- i can beat this market
- im at the top of the world
- and lastly i think i can attack market with my nunchakus

AlexGreen said:

I think another big one is trading with too much size.

Many people, especially those new to the game want to make 100%, 200% maybe even more per year. But to do that you've (normally always) got to take on a lot of risk. And a lot of risk means large losses if you get the trade or trades wrong.

So my advice for those starting out is to trade really small and understand that a 15% - 30% annual return (aith associated low risk) is a great result.

And that's what it boils down to -

Risk-adjusted returns.

So it's not so much a case of how much you make, rather how much was risked to make that amount. A trader that makes a return of 20% a year with a small risk is usually far smarter than one that makes in excess of 100% with lots of risk.

Sadly, many people will only look at the money and always think the guy who makes the most is the best.

Click to expand...

good post. newbies in particular keep swinging for the fences but look at the good hedge funds-returning 15/20% max consistently. my money in the bank makes 3%, if you can return 20% on your money trading happy days.

i agree

gooseman said:

good post. newbies in particular keep swinging for the fences but look at the good hedge funds-returning 15/20% max consistently. my money in the bank makes 3%, if you can return 20% on your money trading happy days.

Click to expand...

yes i agree 100%

Listening to the financial press.......and taking it seriously...