10 Typical Trading Errors

1)Refusing to define a loss

2)Not Liquidating a losing trade ,even after you had acknowledged the trades’s potential is greatly diminished.

3)Getting locked into a specific opinion or belief about market direction.From a  psychological perspective this is equivalent to trying to control the market with your expectation of what it will do :”I’m right ,the market is wrong.”

4)Focussing on price and the monetary value of a trade,instead of the potential for the market to move based on its behaviour and structure.

5)Revenge-trading as if you were trying get back at the market for what it took away from you.

6) No reversing your position even when you clearly sense a change in market direction.

7)Not following the ruled of the trading system.

8)Planning for a move or feeling one building ,but then finding yourself immobilized to hit the bid or offer ,and there after denying yourself the opportunity to profit.

9)Not acting on your instincts or intuition.

10)Establishing a consistent pattern of trading success over a period of time ,and then giving your winnings back to the market in one or two trades and starting the cycle over again.

10 Trading Thoughts

ten101. You only have three choices when you are in a bad position, and it is not hard to figure out what to do:
(1) Get out
(2) Double up, or
(3) Spread it off.

I have always found getting out to be the best of all three choices.

  1. No opinion on the market or you are doubtful about market direction? Then stay out. Remember, when in doubt, stay out.
  2. Don’t ever let anyone know how big your wallet is, and don’t ever let anyone know how small it is either.
  3. If you snooze, you lose. Know your markets, when they trade, and what reports will affect the market price.
  4. The markets will always let you in on the losers; the market’s job is to keep you out of winners. Dump the dogs and ride the winning tide.
  5. Stops are not for sissies.
  6. Plan your trade, then trade your plan. He who fails to plan, plans to fail.
  7. Buy the rumor and sell the fact. Watch for volatility in these situations; it usually marks tops or bottoms in the markets.
  8. Buy low, sell high. Or buy it when nobody wants it, and sell it when everybody has to have it!
  9. It’s okay to lose your shirt, just don’t lose your pants; that is where your wallet is.

One last thought to leave with you. It applies not only to every-day life but to trading the markets as well:
Success is measured not so much by the wealth or position you have gained, but rather by the obstacles you have overcome to succeed!

Some Rules for Living Applied to Trading

I ran across these rules for living, and thought they apply beautifully to the process of trading successfully.  They are as follows:

  1. Show up.
  2. Pay attention.
  3. Live your truth.
  4. Do your best.
  5. Don’t be attached to the outcome.

Show up.  Woody Allen has said 90% of the story is showing up.  And I think that can be true for trading.  Showing up means being prepared and ready before the market opens.  It means getting your entry and exit orders in the market in a timely fashion.  You’ve done your research, and you’re clear about your intentions.

Pay attention.    Watch the price action.  Be cognizant of what your chosen indicators are saying.  Know what news is breaking, and watch the market’s reaction to the news.  Be alert to twists and turns in market direction.  Don’t wander off mentally or physically.

Live your truth.  Your truth could be fundamental or technical or a combination of the two.  But if you don’t trade in accordance with your guidelines, you can get yourself on the wrong side of the situation and yourself.  Be who you say you are as a trader.  Are you honest, perceptive, courageous, steady, and disciplined?  Are you trading in the manner you have chosen or committed to trade.

Do your best.  Honestly, all you can do is your best.  But your best can get better as you practice and learn.  Learn from your mistakes, and forgive yourself past digressions.  Each day is a new day, and each day brings new opportunities.  It’s your job to capture what you can of the opportunities even as you rigorously protect your capital.

Don’t be attached to the outcome.  This is the hard part, and this is the essential part.  The results of any given trade or trading day are really not indicative of whether or not you will be profitable.  One trade or day is simply not the measure of success, and is really irrelevant.  If you’re showing up, and paying attention, and living your viable truth, and doing your best, you can accept whatever outcome develops.  Of course, if the outcome is disastrous over time, you need to go back to the drawing board and develop better methods.

Make Friends

The trend is your friend. Trading is like swimming. You can swim with the current or against it. In a survival situation, you can swim with the current forever. Outside factors such as water temps, need for food and sleep are another matter, but as for pure swimming ability you could swim with a slow or strong current forever.

Not so with swimming against the current. You will eventually tire and drown. That is an absolute certainty. Unless you find intricate ways to reserve kinetic energy and escape the current’s ravage for periods of respite, you will die. The same concept is true for trading with market direction versus against it. If I only had Rs 10000 for every person I heard say, “I’m a contrarian… I don’t follow the herd” through the past fifteen years, I’d have Rs One Crore for free money right now. Any idea where all those market contrarians are today? Other professions than trading. (more…)


dice-illusionIf you have the feeling that the market has a split personality, one day out to shower you with peace and blessings and the other to punish mercilessly, it can only mean that on some level you are still taking it personally. Think of it this way – there are too many players with too many conflicting ideas about market direction for it to ever form one cohesive personality. The only exception I have witnessed to this rule is when fear clearly dominates the scene, and ironically these are times that are the easiest to trade. The highest attainment for a traders developing psychology is to achieve what has been called “intellectual purity” – that is the state free from emotional reactiveness to market behavior; the ability to accept both reward and punishment with equanimity and understanding. That said, we know that big players perform ‘market sweeps’ to take out stops at sitting duck levels, so we can at least attempt to protect against that. The main point though is to struggle against any dimly forming impression of the market being a single entity with a personality. That is an illusion.


1. Trading is simple, but it is not easy.

2.  When you get into a trade watch for the signs that you might be wrong.

3.  Trading should be boring.

4.  Amateur traders turn into professional traders once they stop looking for the “next great indicator.”

5.  You are trading other traders, not stocks or futures contracts.

6.  Be very aware of your own emotions.

7.  Watch yourself for too much excitement.

8.  Don’t overtrade.

9.  If you come into trading with the idea of making big money you are doomed.

10.  Don’t focus on the money.

11.  Do not impose your will on the market.

12.  The best way to minimize risk is to not trade when it is not time to trade. 

13.  There is no need to trade five days a week.  

14.  Refuse to damage your capital.

15.  Stay relaxed.

16.  Never let a day trade turn into an overnight trade.

17.  Keep winners as long as they are moving your way.

18.  Don’t overweight your trades.

19.  There is no logical reason to hesitate in taking a stop.

20.  Professional traders take losses because they trust themselves to do what is right.

21.  Once you take a loss, forget about it and move on.

22.  Find out what loss parameters work best for your setup and adjust them accordingly.

23.  Get a feel for market direction by “drilling down” (looking at multiple time frames).

24.  Develop confidence by knowing and executing your trade setups the same way every time.

25.  Don’t be ridiculous and stupid by adding to losers.

26.  Try to enter a full size position right away.

27.  Ring the register and scale out of your position.

28.  Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your judgment.

29.  You want to own the stock before it breaks out and sell when amateurs are getting in after the move.

30.  Embracing your opinion leads to financial ruin.

31.  Discipline is not learned until you wipe out a trading account.

32.  Siphon off your trading profits each month and stick them in a money market account.

33.  Professional traders risk a small amount of money on their equity on one trade.

34.  Professional traders focus on limiting risk and protecting capital.

35.  In the financial markets heroes get crushed.

36.  Stick to your trading rules and you will never blow up your trading account.

37.  The market can reinforce bad habits.

38.  Take personal responsibility for each trade.

39.  Amateur traders think about how much money they can make on each trade.  Professional traders think about how much money they can lose.

40.  At some point all traders realize that no one can tell them exactly what is going to happen next in the market.

10 Trading Mistakes !


  1. Refusing to define a loss.
  2. Not liquidating a losing trade, even after you have acknowledged the trade’s potential is greatly diminished.
  3. Getting locked into a specific opinion or belief about market direction. From a psychological perspective this is equivalent to trying to control the market with your expectation of what it will do: “I’m right, the market is wrong.” [private] (more…)


convictionConviction implies a settled state of opinion and the inertia of a decision already made; this simply leads to a kind of prejudice towards one market direction or another. But let’s face it: assumption is always the path of least effort. And when has the market ever rewarded the followers of that path? It’s far better to strive to be continually skeptical and yet boldly decisive when the moment requires. The difference may seem limited to semantics, but I think the interaction between our perceptions and the market should be a continually active process, and that includes methodically denying ourselves the allure of false comforts that accompany an unyielding sentiment.



1)Nobody is bigger than the market.

 2)The challenge is not to be the market, but to read the market. Riding the  wave is much more rewarding than being hit by it.
 3)Trade with the trends, rather than trying to pick tops and bottoms. 
 4)There are at least three types of markets: up trending, range bound, and  down. Have different trading strategies for each.
 5)In uptrends, buy the dips ;in downtrends, sell bounces. 
 6)In a Bull market, never sell a dull market, in Bear market, never buy a dull  market. 

 7)Up market and down market patterns are ALWAYS present, merely one is  more dominant. In an up market, for example, it is very easy to take sell  signal after sell signal, only to be stopped out time and again. Select trades  with the trend. 
 8)A buy signal that fails is a sell signal. A sell signal that fails is a buy signal. 
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