Hi, traders,
This is the thread where we focus on what makes us lose in the markets. If you just do the opposite, things will turn around. So, here's a list of things I came up with. Feel free to reply and add your own ways to lose your shirt while trading and I will add them in this list. It is said that the smart man learns from his mistakes, but the wise man learns from the mistakes of others, so maybe some of the beginners will be wise
1. High expectations. If you don't at least double the account every month, it's not worth it, right? Undercapitalisation and the get rich quick dream is among the major account blowers.
2. Overleverage. Risk more than 5% of your account on each trade. This is an effect of undercapitalisation.
3. Overtrading. Trade continuously, try to catch every move in the market and squeeze as much as you can from it. A sure way of giving all your profits back
4. Lack of planning. All winners have a trading plan and follow a rule based method. The losers don't plan and if they do have some rules, they rarely follow them.
5. Trading rumours. Trading based on rumours or the opinion of others shows that you have no idea how the market works. It's a question mark for you. It's also a sign that you don't like to assume responsibility for your lack of expertise. If the trade goes wrong, it's not your fault. The rumour was false or the trader that gave you the signal is stupid . Another sure way of losing. Yep, continue trading the opinion of others if you want to keep losing!
6. Gambling on the news. Placing trades on news items, especially when spreads go crazy.
7. Averaging in. Adding up to losing trades is not bad if you know what you're doing and don't abuse it (e.g. don't add 50 orders, until your whole margin is gone, stick to a max 5% per cumulated positions). It's particularly good if you're not using leverage, but can easily kill you if you are.
8. No stop loss. Don't use a stop loss. Why would you?
9. Take big losses and bank profits as quickly as possible. Most traders do this, they cut their profits short and let their losses run, because they hate to be wrong. Thus, one loss can wipe out a series of profitable trades and this is very frustrating. Frustration confuses the mind and more losses follow.
10. Focusing on too many things while trading. Trading while at your job, or while your kids are breaking things around you . Losers don't focus 100% on trading.
11. Buy EAs (Expert Advisors) and run them on your live account.
12. Exagerate the "cut your losses short" dictum and don't give your trade enough space to move. Then re-enter in the same direction after getting stopped, with the same tight stop and repeat over and over again. It's a quick way to lose lots of cash, as the tiny losses + commisions and spreads add up quickly. I recommend it for those that want to get poor quick.
13. Try picking the top or bottom of the day. It's a fun way of blowing accounts!
What are your reasons for losing? ... Come on, guys. I just added two more ways to lose money. I'm sure you know other ways. Be aware of your mistakes. It's the only way to change them
This is the thread where we focus on what makes us lose in the markets. If you just do the opposite, things will turn around. So, here's a list of things I came up with. Feel free to reply and add your own ways to lose your shirt while trading and I will add them in this list. It is said that the smart man learns from his mistakes, but the wise man learns from the mistakes of others, so maybe some of the beginners will be wise
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1. High expectations. If you don't at least double the account every month, it's not worth it, right? Undercapitalisation and the get rich quick dream is among the major account blowers.
2. Overleverage. Risk more than 5% of your account on each trade. This is an effect of undercapitalisation.
3. Overtrading. Trade continuously, try to catch every move in the market and squeeze as much as you can from it. A sure way of giving all your profits back
4. Lack of planning. All winners have a trading plan and follow a rule based method. The losers don't plan and if they do have some rules, they rarely follow them.
5. Trading rumours. Trading based on rumours or the opinion of others shows that you have no idea how the market works. It's a question mark for you. It's also a sign that you don't like to assume responsibility for your lack of expertise. If the trade goes wrong, it's not your fault. The rumour was false or the trader that gave you the signal is stupid . Another sure way of losing. Yep, continue trading the opinion of others if you want to keep losing!
6. Gambling on the news. Placing trades on news items, especially when spreads go crazy.
7. Averaging in. Adding up to losing trades is not bad if you know what you're doing and don't abuse it (e.g. don't add 50 orders, until your whole margin is gone, stick to a max 5% per cumulated positions). It's particularly good if you're not using leverage, but can easily kill you if you are.
8. No stop loss. Don't use a stop loss. Why would you?
9. Take big losses and bank profits as quickly as possible. Most traders do this, they cut their profits short and let their losses run, because they hate to be wrong. Thus, one loss can wipe out a series of profitable trades and this is very frustrating. Frustration confuses the mind and more losses follow.
10. Focusing on too many things while trading. Trading while at your job, or while your kids are breaking things around you . Losers don't focus 100% on trading.
11. Buy EAs (Expert Advisors) and run them on your live account.
12. Exagerate the "cut your losses short" dictum and don't give your trade enough space to move. Then re-enter in the same direction after getting stopped, with the same tight stop and repeat over and over again. It's a quick way to lose lots of cash, as the tiny losses + commisions and spreads add up quickly. I recommend it for those that want to get poor quick.
13. Try picking the top or bottom of the day. It's a fun way of blowing accounts!
What are your reasons for losing? ... Come on, guys. I just added two more ways to lose money. I'm sure you know other ways. Be aware of your mistakes. It's the only way to change them