1. Not having an exit strategy
2. Not having a risk management plan
3. Not having any idea where one will exit a bad trade
4. Letting bad trades get ugly
5. Not concentrating on the exit as much as on the entry
6. Never knowing when to get out
7. Taking profits too quickly
8. Getting greedy
9. Using arbitrary stops based on dollar amounts
10. Using the same dollar stop for every market and situation
11. Not looking at a chart to place a stop
12. Placing stops that are too close
13. Placing stops that are too far
14. Not using a buffer zone
15. Letting a stop lead you to get lazy
16. Not moving stops as the market moves in your favor
17. Canceling stops as the market gets closer
18. Not sticking to mental stops
19. Ignoring stops
Latest Posts
rssKeeping Perspective – You’re Not “A Trader”
One of the things everyone who trades needs to do is to keep things in perspective. Trading is something we do, but it’s not the only thing we do. There are a great many other parts of our life and what makes us who we are. Trading needs to account for that and be incorporated into your life in a compatible, supportive fashion.
Be cautious about identifying yourself as “a trader”. I say that because when you label yourself in that way you automatically create an association in your mind based on what you have come to think of as a trader. That association will have been built up from all the things you have seen, read, heard about, and experienced in that regard – much of which probably has absolutely nothing to do with you specifically.
That last part is the key. Trading is a very personal thing. No two people are going to trade exactly the same way. When you think of yourself as “a trader”, though, you associate yourself with actions and perceptions and images which come at least in part from other traders. That image in your mind may create internal conflict which hampers your performance.
So thing of yourself as “someone who trades” rather than as “a trader”. It could help to release you to trade the way you are capable.
Glory is not for the weak
Use a computer rather than your brain…
One of the U.K.’s most successful hedge fund managers [David Harding in pic] has spoken of the benefits of using the “emotionless systematic approach”.
That’s another way of saying trend following.
The Dow’s tumultuous 120-year history, in one chart.
Paul Tudor Jones :12 Quotes (Must Read Every Day )
- “Always think of your entry point as last night’s close.”
- “I will keep cutting my position size down as I have losing trades. When I am trading poorly, I keep reducing my position size. That way, I will be trading my smallest position size when my trading is worst.”
- “Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead.”
- “Markets trend only about 15 percent of the time; the rest of the time they move sideways.”
Soros: no shame in being wrong, only in failing to correct our mistakes
Day Traders
If a trader is willing to give a large share of his time and energy to study of the markets and of technical considerations, and if he has the proper ability and proper personal makeup, then it seems quite certain that he will make greater profits on the shorter time frame as opposed to position trading. Certainly the possibility for such profit is much greater in short-term trading.
On the other hand, the individual who is unable or unwilling to give up a good portion of his time and energy to the study of technical considerations, who knows or finds himself erratic in his trading success or unfitted psychologically for short-term trading, will, of course, find greater profit, slower but more certain, by confining his operations to those for the long-swing.
The third and most likely possibility is that most individuals will lose either way. This is the real key:
… a study done by one of the major clearing firms analyzed what percentage of their retail accounts were profitable in the mid-’80s to mid-’90s, and that number came in around eight percent. The most profitable accounts were those with the highest activity levels [ed. pre-tax profits, of course]. But, overall, the floor traders and specialists have always been the most profitable group of traders in history.
It seems the secret to profitable short-term trading is to hold the order book, “proper personal makeup” and “the study of technical considerations” be damned
9 Trading Wisdom for Traders
NEVER THROW MORE MONEY AFTER A LOSING POSITION
Never add to a losing position under any circumstances. Throwing more money at a losing trade will burn your capital faster than you can imagine. This is the main contributor that eliminates losing investors from the trading game. The only thing that happens when you buy more of a losing position is that your net worth declines. You hope that it may turn around eventually and your decision to buy will prove fortuitous. For every example of a fortune from an unexpected turnaround, there are ten examples of bleak outcomes.
ALWAYS INVEST ON THE WINNING SIDE
Do not worry about trading on the bullish or bearish side, but always trade on the winning side. This is a brilliant piece of wisdom. Learn to master the art and science of investing on the winning side. You should be willing to change sides immediately when one side has gained the upper hand. You cannot stay rigid in your positions because the market is dynamic. Keep a close eye to see if the facts have changed regarding the company. If the facts have changed, you must change.
DO NOT HANG ONTO A LOSING POSITION
Failure to admit you were wrong and holding onto losing positions will cost you money. Watching your capital deplete in front of your eyes is de-motivating and mentally exhausting. However, your mind will be even more exhausted if you hold onto a losing trade. You will get more and more fearful with each passing minute, day and week.
In the meantime, you are missing out on a treasure chest of potentially profitable stocks that are waiting to make you money. Bad decisions are valuable sources of learning to master your trading technique. Cut your losses, adapt your trading strategy to include your new knowledge, and search for stocks that will make you money. In the stock market, time is money; there is no time to watch your stock fall all the way to the bottom. (more…)
Reminder: The markets have always been "rigged." Worrying about how they "should" work is a waste of energy
