Common Trading Mistakes

[duyle27]

Just started day trading. I came up with a list of common mistakes. Anything else you guys can think of?


1. SHARE SIZING
A lot of beginners make the mistake of using the wrong share size and taking on more risk than they should. Have a constant risk unit for each trade and size your shares accordingly. I suggest 5$ risk unit for beginners. If your stop loss is .50 cents, you should not buying more than, 10 shares if it is a $100 dollar stock. Because it you will be down more than 5$ if you get stopped out. I made a table for different stop loss sizes and printed it out and put it next to my screen. Makes it easier to assess the size.

2. LATE ENTRY
Don't chase. If it doesn't feel right don't get in. A lot of trades called out in chat rooms are late entries.

3. MISAPPLICATION OF THEORY
This is more a technical mistake.

4. IMPULSIVE PLAYS
Don't try to pick bottoms, make up plays, and play off your emotions. If it's not in your plan don't do it.

5. TAKING EARLY TARGETS
A common mistake is letting your fear take over. You need to define a specific event in taking targets to early. Let them run!

6. SPREAD AND VOLUME
Some stocks are thin and have high spreads. Make sure you know what your trading by reading the LVL2

7. DIRTY CHART
I try to avoid sloppy patterns and charts, because they tend to fail.

8. TIME OF DAY
Don't trade during lunch

9. SMALL STOP
Cheating a stop to get in a trade. The smaller your stop, the more likely you get stopped out.
10. EXIT TRADE TOO EARLY
I need to work on letting my play run out, I had the tendency to shut down the trade when I feel like its going against me. Once again fear.

 

[NVP]

trying to trade before you've understood the Game ............

most people are trading about 2 years ahead of being ready to put dollar to broker

N

 

[NVP]

sorry - i meant give dollars to Broker ......

 

[BeginnerJoe]

Buy high sell low is the biggest mistake of them all.

 

[FringFX]

biggest mistakes
trading with no edge.. or inconsistent or unrefined edge
trading without a plan

duyle27's #5 and #10 are the same, by the way (talking about taking early exits)

 

[counter_violent]

Underestimating the opposition.
Which is precisely the reason why there are so very few winners.

You are up against everyone and everything when speculating in the markets.

 

[malaguti]

Don't anticipate an entry. Wait for the bar to close and the entry to be confirmed

 

[Jack Francisco]

I think the common mistake that the every trader do is that
he can not get the basic knowledge of the Forex
he is not understanding the Forex indicator
show greediness in trading
go in over trade these are the basic mistake which the mostly trader do during the trading.

 

[dealer911]

Dont listen to tips/mentors/signal providors - do your own homework.

 

[thunderstruck]

8. TIME OF DAY
Don't trade during lunch

9. SMALL STOP
Cheating a stop to get in a trade. The smaller your stop, the more likely you get stopped out.
10. EXIT TRADE TOO EARLY
I need to work on letting my play run out, I had the tendency to shut down the trade when I feel like its going against me. Once again fear.

I heard 8 from a broker . He said that because of the lunch break volumes are low and the market can go violently either way in this ? . Didn't believe it didnt test either .

I do 10 a lot but if you combine it with 9 you just play it safe . If you are not carefull with your stop loss and you do 10 you end up losing big and winning small.

 

[SkyMint513]

I think the most important thing is to risk less when you're just starting out so you can survive and learn from your mistakes. And as you get more profitable you can increase the amount that you risk.

 

[random12345]

I think the most important thing is to risk less when you're just starting out so you can survive and learn from your mistakes. And as you get more profitable you can increase the amount that you risk.

Indeed - you need to survive long enough to prove to yourself that you HAVE a statistical edge. Then you can go big. But don't go so small that it's absolutely meaningless.

What else would I add for intra day trading....

Time of the day is hideously important. If I oversleep, I don't trade forex, I need to be up and ready by 6:30. Forex moves much more predictably at this time and gives you a higher chance of starting up for the day. I'm quite lazy and miss many days trading as a result, but it's all useful data so I don't get hung up about it.

What else. Hmm. Believe it or not, forex can be traded automatically (requiring no human instinct or experience whatsoever (except to figure out a system in the first place of course)) depending on the pair. EURUSD isn't as good as you think it is, it tends to move in rapid bursts and stall in short ranges in between, not very good for scalpers I don't think. I have read a lot of very fuzzy explanations of how to trade the EURUSD with all the colourful names given to price action interpretation. There's a reason they're not clear... an obvious one. Anyway, I have my own and I'd come out with a small weekly profit each time, but it's not ideal. I'd be very interested to see institutional HFT code for the EURUSD. VERY. There's a few things I'd like to know how they avoid.

Indices in my opinion cannot be automatically traded unless you have a tiny daily target so I wouldn't waste your time. If I don't hit my target by 10am in indices, I'm usually in trouble. Some futures, like Crude, lend themselves well to forex style trading as though they have huge bars from time to time, 90% of the time, these bars are in the direction of the recent trend. But you need a big bankroll to go messing around with Crude. Having said that, you can make 300 pts in 2 days on Crude and call it a week.

I think I've gone off topic here with this banal ramble.

 

[random12345]

Indeed - you need to survive long enough to prove to yourself that you HAVE a statistical edge. Then you can go big. But don't go so small that it's absolutely meaningless.

What else would I add for intra day trading....

Time of the day is hideously important. If I oversleep, I don't trade forex, I need to be up and ready by 6:30. Forex moves much more predictably at this time and gives you a higher chance of starting up for the day. I'm quite lazy and miss many days trading as a result, but it's all useful data so I don't get hung up about it.

What else. Hmm. Believe it or not, forex can be traded automatically (requiring no human instinct or experience whatsoever (except to figure out a system in the first place of course)) depending on the pair. EURUSD isn't as good as you think it is, it tends to move in rapid bursts and stall in short ranges in between, not very good for scalpers I don't think. I have read a lot of very fuzzy explanations of how to trade the EURUSD with all the colourful names given to price action interpretation. There's a reason they're not clear... an obvious one. Anyway, I have my own and I'd come out with a small weekly profit each time, but it's not ideal. I'd be very interested to see institutional HFT code for the EURUSD. VERY. There's a few things I'd like to know how they avoid.

Indices in my opinion cannot be automatically traded unless you have a tiny daily target so I wouldn't waste your time. If I don't hit my target by 10am in indices, I'm usually in trouble. Some futures, like Crude, lend themselves well to forex style trading as though they have huge bars from time to time, 90% of the time, these bars are in the direction of the recent trend. But you need a big bankroll to go messing around with Crude. Having said that, you can make 300 pts in 2 days on Crude and call it a week.

I think I've gone off topic here with this banal ramble.

OH and if you do ever get successful... don't tell anyone. Not even your close friends. Underplay everything. I tell them that my apartment is heavily discounted by a friend of the family landlord (it costs a small fortune in reality) and that I barely get by through trading. The idea of free money does strange things to people. Refuse all invites to 'see your charts' and of course of taking their money for a return. Believe me. People. Are. Awful.

Someone who remains interested in you without wanting to see how you make money without sweating for it is a friend indeed.

 

[welshguy121]

it s easy to f--- it all up and spend all your money put it behind and as long as you have learned from your mistakes then have a go but be sensible trade what you see and not what you think

 

[welshguy121]

god taken me 2 years to become a member i must be getting the hang of this now lol

na taken a bit longer than that probably touching 5 years now and boy have i had a few sticky moments too but i have learned the art now it s called disapline remember the word because until you ve learned it and understood it you d be better of going outside and setting fire to 50£ at a time

 

[welshguy121]

all newbies will think god this is easy i ve made a tenner and it only took 5 seconds they get cocky and believe me it will have you back discipline learn it or fail miserably

 

[Knell]

My advice to a newbie to trading is to believe you have the edge on the market, put £2,000 in a spreadbet account and make every mistake possible until the account is blown, then load your account up again and blow it again with even more style..you need to experience the emotional roller coaster of these mistakes to learn from them, you'll never learn from them in a demo account..

Make all the mistakes possible, if you're still around afterwards (say about 3 years) then you'll do alright!!

whatever you do, do not believe from anyone you can avoid these mistakes, this would be like researching how to ride a bicycle for the first time and thinking your research will mean you'll ride easily without practice, HA, never!! If you don't want to blow your account (fall of the bike) then keep it in a bank account or pay for a business franchise..