Trading is difficult enough without a simple mistake taking away all your hard won profits. Here are a few ideas that could save you thousands by avoiding silly mistakes.
Trading is difficult enough without a simple mistake taking away all your hard won profits. Here are a few ideas that could save you thousands by avoiding silly mistakes.
Is it Buy, Or Sell
Maybe you have pushed the wrong button when you try to exit from a position. Pushing buy instead of sell is quite common, especially if you trade rising and falling markets. This is most common on the exit and rather than getting out of the trade you end up with twice as much.
This mistake is easily caught by checking in with your open positions after you place a trade to ensure that the trade you have placed did what you expected. If caught immediately this mistake is easily rectified and is likely to only cost a small sum for a stupid mistake. If you do not realise your mistake and the position is left open this can have disastrous consequences for your account.
Remember Your Stops
You may not like the price action and decide to exit your trade. If you do make sure you cancel your stop loss order. The stop order you placed when you entered the position will still be sitting there waiting for the market to move to the stop price. If you leave the order open it could be traded many hours later and the outcome of the trade is unknown. Trading is not about luck, it may move in your favour, but about discipline to follow your strategy.
To catch this mistake, always check your open trades and stop losses before closing your trading platform. This way you will know what trades you have open and avoid any unpleasant surprises next time you trade.
Was That $10000 or $100000
While it is possible to get the maths wrong when calculating your position size it is far more common to get the number of zeros wrong when you place the trade. An extra zero means your risk increases by a factor of 10 times and forgetting a zero reduces your profits to 1/10th.
Checking your open position after the order is placed should enable you to pick up this error as the size of the position will be very different to your normal trading size.
Tight Stops Create Losses
A very common mistake made by traders is to use very tight stop losses. If the stop order is very near to the current price it can be hit by the normal fluctuations that occur. Tightening the stop loss does not prevent losing money, it often creates it.
Stops must be placed far enough away from the price action to exit you from a position if your trade view turns out to be wrong. Give the underlying share room to move to avoid getting caught by this CFD mistake.
Discipline Is Essential
If you can overcome the previous CFD mistakes there is still one more that you have to master. That is your own behaviour. It is not uncommon for beginning traders to enter a share once it is climbing rapidly, but this usually has disastrous results. However it is not only new traders that get caught by this idea, with more experienced traders also falling for this simple trap.
The market offers an unlimited supply of trading opportunities, far more than you could ever possibly trade. If you miss a trade today, there will be another trade along soon enough. By following a trading plan you can avoid getting caught by impulsive trades, which can prove to be costly.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability.
Trading is difficult enough without a simple mistake taking away all your hard won profits. Here are a few ideas that could save you thousands by avoiding silly mistakes.
Is it Buy, Or Sell
Maybe you have pushed the wrong button when you try to exit from a position. Pushing buy instead of sell is quite common, especially if you trade rising and falling markets. This is most common on the exit and rather than getting out of the trade you end up with twice as much.
This mistake is easily caught by checking in with your open positions after you place a trade to ensure that the trade you have placed did what you expected. If caught immediately this mistake is easily rectified and is likely to only cost a small sum for a stupid mistake. If you do not realise your mistake and the position is left open this can have disastrous consequences for your account.
Remember Your Stops
You may not like the price action and decide to exit your trade. If you do make sure you cancel your stop loss order. The stop order you placed when you entered the position will still be sitting there waiting for the market to move to the stop price. If you leave the order open it could be traded many hours later and the outcome of the trade is unknown. Trading is not about luck, it may move in your favour, but about discipline to follow your strategy.
To catch this mistake, always check your open trades and stop losses before closing your trading platform. This way you will know what trades you have open and avoid any unpleasant surprises next time you trade.
Was That $10000 or $100000
While it is possible to get the maths wrong when calculating your position size it is far more common to get the number of zeros wrong when you place the trade. An extra zero means your risk increases by a factor of 10 times and forgetting a zero reduces your profits to 1/10th.
Checking your open position after the order is placed should enable you to pick up this error as the size of the position will be very different to your normal trading size.
Tight Stops Create Losses
A very common mistake made by traders is to use very tight stop losses. If the stop order is very near to the current price it can be hit by the normal fluctuations that occur. Tightening the stop loss does not prevent losing money, it often creates it.
Stops must be placed far enough away from the price action to exit you from a position if your trade view turns out to be wrong. Give the underlying share room to move to avoid getting caught by this CFD mistake.
Discipline Is Essential
If you can overcome the previous CFD mistakes there is still one more that you have to master. That is your own behaviour. It is not uncommon for beginning traders to enter a share once it is climbing rapidly, but this usually has disastrous results. However it is not only new traders that get caught by this idea, with more experienced traders also falling for this simple trap.
The market offers an unlimited supply of trading opportunities, far more than you could ever possibly trade. If you miss a trade today, there will be another trade along soon enough. By following a trading plan you can avoid getting caught by impulsive trades, which can prove to be costly.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability.
About the Author:
Jeff Cartridge is the author of Supercharge Your Trading with CFDs and co-created the website LearnCFDs.com Learn the Foundation of Successful Trading CFD Trading Strategy
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