10 Common Mistakes In Trading
By James Okada Lee
I would like to talk about 10 common mistakes in trading. New traders are often unaware of what is required in trading and the bad habits that can lead to financial suicide.
1. Under capitalization - One of the first mistake I made when beginning to trade was being under capitalized. I started with a $10K account without any idea on how to trade. You need enough capital to learn and gain the experience. Some like to call the initial stake "market tuition." If you can avoid paying your dues, great for you. But most new traders will lose their money. Just make sure you learn from every loss.
2. Having the approach to trading as a "learn as you trade" - Big mistake. "Learn as you trade" = losing money. Losing money can lead to emotional and financial stress and may even create enough fear in you making it hard to trade. Make sure you come prepared to the battlefield. Be a strategist. Sun Tzu said, "The battle is won before it is fought." Think about it.
3. Trading as a hobby - Take a look at your hobbies. Do they
make money? Hobbies in general are entertainment that cost
money. Do not approach trading as a hobby. Treat it like a
business. Develop a business plan, have goals, and understand
what you want out of trading.
4. Thinking that you know it all - The moment one thinks he
knows it all is the moment he has become a fool. Its impossible
to know everything about the markets. This is a lifetime
learning process. Find your niche.... find your speciality and
be an expert in it. In other words, find your edge. One thing I
learned in trading is that niche = money.
5. Trading without a plan - One of the worst things you can do
as a trader is to trade without a plan. Trading without a plan
is like driving in a new area without a map or a navigation
system. You are lost.
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9. Have
realistic goals - Too many traders come into this arena without
unrealistic goals. Questions like "Can I make a million my
first year with a $10k account?" Sure you can..... but is
that really realistic? Focus on crafting your trading. When you
know how to trade the money will flow naturally.
10. Not analyzing yourself and your trades - This a poker habit
I have. I tend to analyze every losing and winning hand to learn
from it. Traders need to do the same and analyze every trade.
Think about it after the trading hours and focus on what you can
do to improve. Trading is a constant journey of soul searching
as well. Understand yourself and you will significantly improve
your trading.
James Lee is a full-time day trader specializing in the
mini-sized Dow futures. His core trading strategy is based on
pivot point clusters and Market Profile. Find out how to
identify high probability trading opportunities at http://www.traderslaboratory.com
Article Source: http://EzineArticles.com/?expert=James_Okada_Lee
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