The Most Common Mistakes Stock Traders Make!

Traders Make the Same Mistakes Over and Over AgainTraders make critical mistakes which cause their losses to exceed their winnings. Over 90% of all traders fail! There are only four possibilities when we trade:Big LossesSmall LossesSmall Profits Large ProfitsThe first and largest mistake is that traders allow themselves to fall into big losses. There will always be losses. There is nothing perfect. Your job is to keep these losses small. Avoiding the big losses will enable...
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Traders Make the Same Mistakes Over and Over AgainTraders make critical mistakes which cause their losses to exceed their winnings. Over 90% of all traders fail! There are only four possibilities when we trade:Big LossesSmall LossesSmall Profits Large ProfitsThe first and largest mistake is that traders allow themselves to fall into big losses. There will always be losses. There is nothing perfect. Your job is to keep these losses small. Avoiding the big losses will enable probabilities to come to light. Many traders do not use stops or simply do not believe that a trade has gone against them. Small losses morph into big losses. Realize that small losses and small profits will negate each other and at rare times you will stumble into some big profits by being consistent. We will get into this later on.The biggest mistakes revolve around:1 Not having a Trading Plan2. Overleverage (Trading too large for one's account size)3. Lack of Risk & Money Management4. Lack of Patience & DisciplineTrading PlanThere are many that just dive into trading without any sort of plan. They watch the news or get a tip and just buy. They do not know how many shares they should trade nor do they know when they should exit with a profit or a loss. Trading is like every other business. You need to have a complete plan. Without a trading plan you are just guessing and putting yourself through unnecessary stress. With a complete trading plan you know at every minute what you should be doing and not doing. .You need to know 1. What to buy...2. How much to buy3. When to exit with a loss or a profit.This trading plan has to fit your personality. You really need to focus on building your trading plan more than just worrying about finding that Holy Grail Indicator for entries or exits. There are those who believe that trading is "easy". Because they believe that trading is "easy" they do not think they need to plan. They have read Market Wizards books or heard stories that this trader turned $1,000 into $1,000,000. In reality it is more like turning $100,000 into $25,000.Traders need to always lower their expectations. As much as the market can give the market can be ruthless. At every moment you need to know exactly what you should be doing. Nothing should be left to guesswork while in the midst of a trade. Traders must invest in themselves and their trading plan which addresses "EXACTLY" the three points listed above. You do not want to be the trader who makes subjective decisions based on his opinions or the news. This is the surest way to lose money. Your trading plan needs to address the issues I proposed earlier in our discussion...Trade with the Trend Cut Losses ShortDon't let the Big Winners Get AwayHave Patience & Discipline to let the plan work overtime.