Trading decisions are often made in milliseconds, resulting in both favorable and/or unfavorable outcomes which can play on a trader’s psychology. The impulse of your trading decisions can lead to potential gains or losses and provides a critical foundation for why having clearly defined goals is essential. With changing technology, changing demands on traders, and increased sophistication, trading haphazardly may be viewed as potential trading suicide.
One of the most important requirements successful traders look for is addiction reduction and emotional detachment to having to trade.
Experienced traders know that a key to having consistent trading success is having a good strategy. A good strategy will guide a trader as to when to enter a stock and help him/her determine what risk level is associated with the trade setup.
A significant number of traders rely entirely on their judgment. This approach is good with the caveat that the trader has good decision-making skills. Good decision-making skills are essential for a trader’s success, in general, and longevity, in particular. If a trader learns to make timely, well-informed decisions and take well-considered actions, he/she can often enhance the trade setups to lead ultimately to brilliant and well-deserved profitable trades. However, if the trader makes poor decisions without proper risk mitigating tools, the trader risks failure, and his/her tenure as a trader will most likely be brutally short.
|Mistake #6: Trading the Market at the Wrong Time|
|Sometimes traders trade just to trade (see Mistake #7) which oftentimes gets them into a bind – like trading during the sideways bottoming or sideways topping phases of the Stock Market Pricing Cycle. Unless you have the stomach for scalp trading, it’s best that you keep it simple and buy when prices are going up or sell when they are going down – not sideways. Stick to the basics and you’ll more often than not find yourself trading at the Right time|
|Mistake #7: Trading Boredom|
|It takes a certain temperament, a certain type of person to be able to sit and look at charts for the better part of a day. And when you’re patiently looking at the market price cycles, it’s amazing how few high-quality, high-probability trades occur. Because of this, many traders end up trading just to trade, thinking that they have to do something or perhaps doing it out of boredom. Overtrading is a classic mistake of traders. Trading is definitely a case where more often than not, less is more.|
|Mistake #8: Unrealistic Expectations|
|Some traders get so caught up in the “glamour” of trading that they truly believe that they will beat the odds and become rich and famous in no time, with minimal effort, and with very little capital. Because you only hear and read about the extremely successful traders, you don’t hear much about the majority of them that are toiling away doing all they can to make a living through trading. Actually, most are not doing all they can to be successful. Many lack the knowledge, attitude, skills, and habits to be successful traders and aren’t willing to invest in themselves to get to the next level. The worst part is, some don’t even know how deficient they are yet they continue to feed the market with what little funds they have left.|
|Mistake #9: Assuming There a Finite Number of Mistakes|
|There are probably as many mistakes as there are trades, so don’t assume you will never make them after a certain point. You will always make mistakes as long as you continue to trade. The best you can do is learn from them. Just when you think you’ve got it down pat, a “mistake” will happen . Just when you think you’ve seen it all, something happens and you realize you haven’t. Trading is like golfing – always challenging, never perfect. Both take patience, discipline, practice, tenacity, and always provide the opportunity to do better next time.|