Last week I started with interesting insight into the minds of traders through 6 most common habits traders often committing. Today I prepared another six. Enjoy and learn from somebody's mistakes.
7) Using too much indicators - When you starting, you usually tend to think that more of everything is simply better. That more indicators you put to your charts the earlier you will spot the trend or a reversal. But more and more studies you add, you start to lose your ground and everything is a big mess on your charts and the important things start to fade away. Not mentioning that every trader on the world has the same possibility and in the end we all can use the same indicators if we only want. So, probably, there is no hidden formula in those. Look at some examples - my earlier chart and how I trade now.
8) Relying on other's predictions - When our trading plan doesn't work or we do not follow its rules, we often seek some reason, why we are unsuccessful. But instead of blaming us for not obeying the rules of trading plan or money management, we start to think, that problem is in our bad market prediction. What if other people know what happens next? What if they have some insight I do not have? We start to watch others, reading where they suspect a currency pair to go, then often get to know that everyone has its own view on price movement, based on own trading experience and instead things are getting clearer, there is even bigger ambiguity about future price movement. So better follow only your plan and ideas. In the end it is only you who you should blame, if ever, so your decisions should be made based solely on your head. Of course, as you get trading experience, you can from time to time just check what other predict, but do that after placing your trades, just for fun.
9) Overtrading - Goes hand in hand with point 7. Starting traders simply overdo everything. No exception in this. Setting a tradeplan with a ten or more trades a day, that is a way to hell for a newbie. Do not understand me bad, there are traders who can handle that from beginning, but chances are small. That's why I advise to trade less in the beginning. For a newbie it is very easy to catch a downswing in this predator's environment and with every subsequent losing trade they lose the stability and stop following rules, setting completely new ones or do not having any. Ideal for blowing accounts. Less trading in this stages means less mistakes.
10) No basic knowledge of markets - This is quite rare I would say, but sometimes people who start to trade instead overdoing everything lack the things they shoud know before they start. These I would divide into two groups - first are people who think they know enough, they really read few articles and got a feeling its pretty simple and they are ready for earning millions. Market will teach them that they do not know. Whether they will improve and learn is a question. Second group are people who do not know basics and even do not pretend they want to know. They simply rely on other's predictions, some other people handle their money or help them with investing because they do not have time. If they are lucky they shout it all around the world, if they are unlucky, they blame others and all the world for not giving them a chance and calling trading a scam.
11) Not knowing own trading platfom - This probably doesn't happen, but did u hear about people who blow their accounts, because they could not find a stoploss order in platform? Or made a typing error and bought more they could according to the trading plan? Being unfamiliar with your trading environment probably is not the case, why you aren't making money. But it's like a flu - it doesn't kill but it's pretty annoying and can demotivate you from successful trading.
12) Not having a distance - Last but not least, not having a good distance from trading means, we live 24 hours a day only for trading, not resting, thinking only about our trades. That is not good at all and in the end the result of it is overtrading, committing mistakes, not following trading plan. That's why I always recommend to do less than more. After a trade switch off the platform, go out with friends, go to the gym, do something not connected with trading at all. Have more hobbies than just a watching charts whole day. You will then be more fresh and also more looking forward to trading, if it won't be your only goal. You will see, it pays out.
Thank you guys for reading my little series and feel free to rate, vote and comment, if it helped or you simply like it. More to come...