What Are The Ten Common Mistakes New Traders Are Making?

Today’s blog post comes straight from a great discussion out of our facebook trading group New Traders, Rich Traders, & Good Traders. Thanks to Andrew Rocco for the original post and also Matthew Smith,and Travis James for their insightful comments in our trading group.

Here Are The Ten Common Mistakes New Traders Are Making:

They jump from trading strategy to trading strategy. New traders must find specific methodologies and systems and focus on trading them with discipline.
Position sizing is too big. New traders tend to trade so big that it engages their emotions to interfere with the trade and creates big losses that destroy their capital.
They don’t use stop losses. New traders tend to focus so much on entries and being right that they fail to have an exit plan if they are wrong and if they do they tend to not take the initial stop loss level and instead hope for a rebound.
Not researching who they are versus how their system works. A trader can only trade a system that matches their risk tolerance and market beliefs.
They like following others into trades. A trader can not copy others because they usually don’t know the time frame of the trade, the position size, or the stop loss level.
They lack risk management. With out risk management new traders just give back all their profits during their next losing streak or blow up their account with a few big bad trades.
Using leverage and margin. New Traders seem to only imagine the big potential profits of using leverage in options and futures or margin and not the risk of amplifying a loss.
Selling too soon for no reason other than to “take profits”. New traders tend to like to take profits fast to lock them in but let losses run and hope they come back to even. They primary way to be a profitable trader is to have big wins and small losses.
Caring too much about the short term noise. Ignore the noise in your time frame and only focus on the actual signals that really tell you it is time to enter or exit.
Over trading or revenge trading. New traders tend to think that all activity is good, only the right activity is good. Never trade in anger trying to get back money that you lost. Money only returns to you by following a robust trading system.

Today’s blog post comes straight from a great discussion out of our facebook trading group New Traders, Rich Traders, & Good Traders. Thanks to Andrew Rocco for the original post and also Matthew Smith,and Travis James for their insightful comments in our trading group.

Here Are The Ten Common Mistakes New Traders Are Making:

They jump from trading strategy to trading strategy. New traders must find specific methodologies and systems and focus on trading them with discipline.

Position sizing is too big. New traders tend to trade so big that it engages their emotions to interfere with the trade and creates big losses that destroy their capital.

They don’t use stop losses. New traders tend to focus so much on entries and being right that they fail to have an exit plan if they are wrong and if they do they tend to not take the initial stop loss level and instead hope for a rebound.

Not researching who they are versus how their system works. A trader can only trade a system that matches their risk tolerance and market beliefs.

They like following others into trades. A trader can not copy others because they usually don’t know the time frame of the trade, the position size, or the stop loss level.

They lack risk management. With out risk management new traders just give back all their profits during their next losing streak or blow up their account with a few big bad trades.

Using leverage and margin. New Traders seem to only imagine the big potential profits of using leverage in options and futures or margin and not the risk of amplifying a loss.

Selling too soon for no reason other than to “take profits”. New traders tend to like to take profits fast to lock them in but let losses run and hope they come back to even. They primary way to be a profitable trader is to have big wins and small losses.

Caring too much about the short term noise. Ignore the noise in your time frame and only focus on the actual signals that really tell you it is time to enter or exit.

Over trading or revenge trading. New traders tend to think that all activity is good, only the right activity is good. Never trade in anger trying to get back money that you lost. Money only returns to you by following a robust trading system.

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