How Professional Traders Avoid Some Common Trading Mistakes Made by the Novice Day Or Swing Trader
Day or swing trading can be a very lucrative career.
It is the only profession where a properly trained individual can make a lot of money in a very short time.
It can also be very punishing or devastating to someone who approaches trading as a hobby.
Of all the people drawn to trading from various walks of life only about ten percent wind up becoming consistently profitable traders.
Most people blow out an account or two before quitting completely or begin to see an improvement in their trading.
Some common mistakes made by newer traders and how they are avoided at all costs by professional traders are highlighted below.
(1) Professional traders know the importance of using stop losses.
They always trade with stops in place and never violate them.
They never attempt to make back their losses in one day and know when to walk away from the screen if they are having a bad day.
Newer traders might not use stops and might keep trading after a few losses in a row.
They are more interested in making back their losses as soon as possible.
(2) While trading the pros do not focus on anything else but their trading.
They just care about what they see on the screen and might have a business channel turned on at the most on their TV.
The newbies are not focusing on their screen all the time.
They are distracted by things going on around them and are not paying attention to trading as they should.
(3) Professional traders know their limits very well.
They know it is very critical to only trade with money they can afford to lose.
They know how important this is for their financial as well as emotional being.
Newer traders take on some extraordinary risks at times.
They might also be tempted to use money they might otherwise use for bills or even borrow from their credit cards.
They put themselves under a lot of stress that almost forces them to take wrong trades to try to make money.
This only adds to the mental stress already in place as trading can be emotionally straining at times.
(4) Professional traders know that the market is always right.
They never expect to be right all the time.
They accept losses very gracefully.
Newer traders have a hard time accepting losses and they try very hard to prove themselves right to the market all the time.
(5) Professional traders have a lot of respect for the market they trade.
If their market gets too volatile at times they know to stay away from it and not trade at such times.
Newer traders do not appreciate the might of the market and will even trade during turbulent times which can blow them out pretty quickly.
(6) Professional traders do realize the importance of trading losses.
They use them to learn from them and try to not make the same mistake again.
They know that losses are part of the trading game and know that they do not need to be right on all their trades.
They know as long as they are right on about half their trades and make more on their winners than what they lose on their losers they will make money in the long run.
Newbie traders have a hard time accepting losses and do not try to learn from them.
They feel very strongly about the need to win every trade they take.
(7) Lastly and probably most importantly is the use of instinct in trading.
Professional traders have a plan that they make and follow it very religiously while trading.
They always play by and follow the rules they have put into their trading plan.
They never listen to their gut feelings or ego while trading.
Newer traders do not have a trading plan in place.
Most of their trades are never planned and are taken purely on gut instinct.
They trade by the seat of their pants almost all the time.
By not making the mistakes outlined above and trying to avoid them at all costs, newer traders will quickly find themselves on the way to trading success and financial freedom a lot quicker than anticipated.
It is the only profession where a properly trained individual can make a lot of money in a very short time.
It can also be very punishing or devastating to someone who approaches trading as a hobby.
Of all the people drawn to trading from various walks of life only about ten percent wind up becoming consistently profitable traders.
Most people blow out an account or two before quitting completely or begin to see an improvement in their trading.
Some common mistakes made by newer traders and how they are avoided at all costs by professional traders are highlighted below.
(1) Professional traders know the importance of using stop losses.
They always trade with stops in place and never violate them.
They never attempt to make back their losses in one day and know when to walk away from the screen if they are having a bad day.
Newer traders might not use stops and might keep trading after a few losses in a row.
They are more interested in making back their losses as soon as possible.
(2) While trading the pros do not focus on anything else but their trading.
They just care about what they see on the screen and might have a business channel turned on at the most on their TV.
The newbies are not focusing on their screen all the time.
They are distracted by things going on around them and are not paying attention to trading as they should.
(3) Professional traders know their limits very well.
They know it is very critical to only trade with money they can afford to lose.
They know how important this is for their financial as well as emotional being.
Newer traders take on some extraordinary risks at times.
They might also be tempted to use money they might otherwise use for bills or even borrow from their credit cards.
They put themselves under a lot of stress that almost forces them to take wrong trades to try to make money.
This only adds to the mental stress already in place as trading can be emotionally straining at times.
(4) Professional traders know that the market is always right.
They never expect to be right all the time.
They accept losses very gracefully.
Newer traders have a hard time accepting losses and they try very hard to prove themselves right to the market all the time.
(5) Professional traders have a lot of respect for the market they trade.
If their market gets too volatile at times they know to stay away from it and not trade at such times.
Newer traders do not appreciate the might of the market and will even trade during turbulent times which can blow them out pretty quickly.
(6) Professional traders do realize the importance of trading losses.
They use them to learn from them and try to not make the same mistake again.
They know that losses are part of the trading game and know that they do not need to be right on all their trades.
They know as long as they are right on about half their trades and make more on their winners than what they lose on their losers they will make money in the long run.
Newbie traders have a hard time accepting losses and do not try to learn from them.
They feel very strongly about the need to win every trade they take.
(7) Lastly and probably most importantly is the use of instinct in trading.
Professional traders have a plan that they make and follow it very religiously while trading.
They always play by and follow the rules they have put into their trading plan.
They never listen to their gut feelings or ego while trading.
Newer traders do not have a trading plan in place.
Most of their trades are never planned and are taken purely on gut instinct.
They trade by the seat of their pants almost all the time.
By not making the mistakes outlined above and trying to avoid them at all costs, newer traders will quickly find themselves on the way to trading success and financial freedom a lot quicker than anticipated.
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