So you want to become a successful trader? Well, you are going to have to avoid making many common mistakes that traders often fall victim to. You’re GOING to make mistakes as you learn to trade, but the traders who actually start making money are the ones who LEARN from those mistakes and figure out how to stop committing them over and over. In this lesson, I am going to discuss the most common mistakes that traders make and give you some simple solutions to them. After that, it’s up to you to learn from them and make sure to avoid them as you continue to analyze and trade the markets.
Being in Too Many Trades at Once and Over-Trading
This is perhaps the most classic mistake that 100% of beginners make and about 90% of the rest make. Also, it’s no surprise that about 90% of traders lose money over the long-run when about 90% of them are trading too much. Another interesting tid-bit is that if you find you’re in more than one trade at a time, you’re probably trading too much. There really is no logical reason to be in more than one trade at a time, ever.
Most people simply cannot learn to ignore the temptation to constantly be in a trade, so they make up all sorts of reasons why they should trade or they make up trading signals that aren’t really there. The cold hard truth of it all is, unless you learn to control yourself and stop over-trading, you are never going to make consistent money trading the markets.
Perhaps the quickest and easiest way to train yourself to stop over-trading is simply to change the way you think about trading and what “making money trading” actually consists of. Once you start remembering that less is more and that you will literally MAKE MORE MONEY by TRADING LESS over time, you will begin to look for reasons why a potential trade might not work out, instead of trying to find any little reason possible to enter the market (like most traders do).
Spending Too Much Time Thinking about Trading and Looking at Charts
Similar to over-trading, is generally just thinking about trading too much. Traders often make the mistake of spending too much time flipping through the charts over and over, even when there are no obvious price action signals to trade. As a result, what ends up happening is that they enter a trade they wouldn’t normally take if they where following their trading plan.
If you find yourself at the point where you are thinking about the markets and trading / trades you’re in, nearly all the time, it’s safe to say you are also over-trading and losing money as a result.
You must build in planned time away from the charts, into your trading plan. Then if you are following your trading plan, those regularly scheduled times you’re away from the charts are just going to be “part of the plan”, “part of the process”. If you start deviating from the process and end up losing money as a result, you have only yourself to blame. So, in the end, it comes down to how good you are at staying disciplined and sticking to a plan, which is why most people lose money at trading; because they simply can’t stick to a plan and stay disciplined over a long period of time (consistently).
