In Trading mistakes are common to traders. As human we are prone to errors and mistakes. Here are some common mistakes traders mostly commit:
1. Excitement: Yeeeeyyy! I just learned that if you invest you will get rich. I need to buy my favorite stocks. You used all your money to buy all those famous company without thinking of the trend, the time, the cycle, the business. All you know is that they are blue chips, or they have good management, or you are using the product, or you know the owner. After some time you noticed that the stock market is a cycle just like gardening there is a time for planting, a time for waiting and a time for harvesting. If you got it all mixed up then you're doomed but if you are lucky and you got it right then good for you but you might also be doomed if you committed the next mistake.
2. Overconfidence: Wow! I always win! You think of yourself as a genius. You think you will never go wrong. You jump over a stock thinking that whatever you do you will win the trade because you are a genius. Sometimes fate will really pull your feet down and show you that you are just lucky. Without having the proper discipline you might win some but you will lose more. Treat a winning trade like it was nothing and a losing trade like it was just a part of the game. Always remember that tomorrow is another battle, another trade and we do not know what will happen. Will the odds be with us or not? After all with overconfidence lots of mistakes will come because you are not in a proper mindset.
3. Addiction: An overconfident trader not on the proper mindset will fall in this. They will never notice that they are addicted already. They sell earlier because they want the hang of trading and not maximizing the profit at all. They thought they are winning but not considering proper position size, risk management, and not having a system. They just trade because they want excitement. Trading is really a boring one if you are not bored then maybe it is addiction that is causing you to lose more money than earn more.
4. Over-leveraging: This can also come with overconfidence and addiction. You think you are great that you can trade money you don't own. You think your funds are unlimited because you can just order and order whatever you want without planning how to enter, where to enter, when to enter and when to cut your losses. When you are on the process of addiction you will tend to just borrow and borrow until someone will stop you and ask you to pay all your losses and that is the only time you will realize that you are one fucked up trader.
5. Revenge trading: Once you are at a loss you want to have your revenge. Everybody wants that right but the question is Is your mind in the proper mindset. Do you have a plan to do that. Did you learn from your past mistake or you are still in denial that it was not your fault? If you still don't get it then what you have to do is to stop trading. Stop thinking of having your revenge! Your revenge should be sweeter and comes with a proper mindset. You should already be disciplined to do that. Cause if you will force yourself on getting even then all you will commit are more mistakes. For example you will average down on your chosen stock when it shows that it is a complete downtrend when what you should do is to cutloss. You will cutloss an uptrend stock because your entry is wrong instead of buying more. You see stocks is more of a strategic battle. It has no right formula so you need to be adaptable and can formulate any strategies that can help you win the battle.
6. Laziness: One of the sins of traders is laziness. They are so industrious on the wrong things. Industrious with facebook analysis, industrious with becoming close with the gurus, they thought they are privileged that these gurus are whispering them to buy a stock that they are actually selling. I've got a friend which was personal messaged by a well known guru to buy this stock. Wow! A famous guru pm'ing me I'm so blessed is what newbie might tell to themselves. Then boom it went down 50%. It's good that he just bought a little of that or else he might have lost his hard earned money. Don't put your stock tips on a certain person or guru you need to have due diligence as well. Even if you are paying a subscription you also need to check what you are going into. Learn to check the charts first. Learn about moving averages to know where the trend is going. Use short MA, medium, and long to develop your trend.
7. Not handling emotions properly: Emotions are innate to us we are only humans so how do we mitigate this fear of losing, fear of entering, greed, euphoria and the likes? We need indicators. We need to understand the meaning behind those indicators. You need to have confidence on your indicators. You only follow what your heart and instinct is telling you. Only YOU not your friend or other traders in the stock world. If someone sells you need to check your system if it really is a sell or not. You don't have to follow them because you don't know the reason why they sell. They might have seen another opportunity and you don't even know how to trade that other opportunity. Just stick to what you already studied you don't have to do what other's are doing. Just be yourself whatever system you are comfortable with!
You are the only one who knows yourself well. You need to accept the reality that the fault lies withinYOU. Stop pointing fingers and make excuses. The only time you will become a matured and disciplined trader is when you opened your eyes and identify all of your mistakes. The moment I have realized all my mistake is the moment I gained back what I loss and I have more winning trades than my losing trades. Polish your trading style. Learn some indicators that can improve your discipline. Always trade with the right mindset. Stop being impulsive. Have a set of rules that can help you with your buying and selling and coming back whenever you have realized a mistake. Then you're all set.
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