shadowninja
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Since starting trading, I have realised that once I had a system in place that I know can make regular money, the only person to stop me being successful is myself. So, to help people new to day trading or who are yet to turn this hobby into a source of income, I thought I would write a few things to check:
-Greed. I have lost so much money through being greedy. When it goes into profit and bounces around, I am desperately hoping it will increase. Of course, the reality is that many times it just drops. But it is still in profit, so I start thinking, "Oh, it was £50 just now. It will happen again." but it drops further. Again, I think, "Hey it was £50 just now. Ok, it's £15 now but it could rise..." And before I know it, I'm in loss. Or it's a situation where the profits are minor and it starts bouncing around. Once more I start willing the profit to increase. At that point, it's best to get out, I've found. Sure, it could go up. It could also go down. Ascending rolling stoplosses help here.
-Impatience. I have a set of rules and through experience, I know that I will more likely profit by sticking to them. However, I start to get impatient and then go in when the conditions are not perfect. Yep, I lose money.
-Boredom. Staring at the screen can get boring. And I start to spot opportunities that aren't really any good. So I buy in. And find out I was wrong. (I do this less now because I occupy myself with other things like computer games.)
-Discipline. I guess it is covered by impatience and boredom. However, the problems above are increased because I do not obey my stoploss. Additionally, sometimes, I am just wrong even if the conditions were perfect. I start thinking, "Well, I've seen it turn upwards when it's been like this before" or "The conditions were right so it should rise!" when it's gone through the stoploss. And I find that it continues to plummet. I eventually stop out at double the stoploss. If I was more disciplined, I'd get out earlier and save myself a lot.
-Eagerness. It is an exciting hobby. Watching your profit increasing and decreasing, not knowing when to sell, or if this time, you're in for a massive profit. So I start trying to buy in thinking, "It's worth a punt." I might as well put money on the horses if I am doing that.
So there you go. How to lose money the easy way. I will add more when I think of them.
-Greed. I have lost so much money through being greedy. When it goes into profit and bounces around, I am desperately hoping it will increase. Of course, the reality is that many times it just drops. But it is still in profit, so I start thinking, "Oh, it was £50 just now. It will happen again." but it drops further. Again, I think, "Hey it was £50 just now. Ok, it's £15 now but it could rise..." And before I know it, I'm in loss. Or it's a situation where the profits are minor and it starts bouncing around. Once more I start willing the profit to increase. At that point, it's best to get out, I've found. Sure, it could go up. It could also go down. Ascending rolling stoplosses help here.
-Impatience. I have a set of rules and through experience, I know that I will more likely profit by sticking to them. However, I start to get impatient and then go in when the conditions are not perfect. Yep, I lose money.
-Boredom. Staring at the screen can get boring. And I start to spot opportunities that aren't really any good. So I buy in. And find out I was wrong. (I do this less now because I occupy myself with other things like computer games.)
-Discipline. I guess it is covered by impatience and boredom. However, the problems above are increased because I do not obey my stoploss. Additionally, sometimes, I am just wrong even if the conditions were perfect. I start thinking, "Well, I've seen it turn upwards when it's been like this before" or "The conditions were right so it should rise!" when it's gone through the stoploss. And I find that it continues to plummet. I eventually stop out at double the stoploss. If I was more disciplined, I'd get out earlier and save myself a lot.
-Eagerness. It is an exciting hobby. Watching your profit increasing and decreasing, not knowing when to sell, or if this time, you're in for a massive profit. So I start trying to buy in thinking, "It's worth a punt." I might as well put money on the horses if I am doing that.
So there you go. How to lose money the easy way. I will add more when I think of them.