The following mistakes can happen to anyone, beginners and veterans alike. Even if someone has been trading a longtime, it isn’t unusual for a lapse in trading discipline to occur from time to time. Most importantly, a trader should recognize early on if this is occurring and take a step back from the market.
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Trading Mistakes to Avoid
- Holding on Too Long & Taking Profit Too Early: In order to avoid losing too much profit, a trader can limit losses by setting a stop-loss order and remaining committed to it. Small losses are part of everyday trading. It is important to accept this principle and get out of a trading position when things are going sour.
- Having No Trading Plan: Without a plan it is all too easy to fall prey to the emotions of the market changes. A well-thought out plan keeps a trader committed to a direction.
- Trading Without a Stop Loss: Traders must make stop-loss orders based on research and analysis. This will help a trader avoid a small loss from becoming a wipe-out of trading capital.
- Overtrading: Trading too often and too many positions in the market at once is a big mistake. Instead, traders should look for key opportunities.
- Not Adapting to a Changing Market: As much as having a well-developed plan is essential, a trader must still remain flexible with his overall trading strategy.