Smita Parekh 22nd Apr, 2019
Day Trading Mistakes put a trader in an unwanted position. The trading mistakes are applicable for novice and expert traders as well. This is true for any type of trading style. One mistake can take away profits of several trading days, if not wipe you out of the market itself.
Ever wondered why traders keep repeating their mistakes? Well this is because the biggest challenge that you will ever face while trading is YOURSELF. If you ever want to become a successful trader then you will have to master the technique of not letting your emotions get in the way of your trades. Mastering your discipline and your emotions will eventually go a long way in your trading career.
Below is a list of most commonly made Day Trading Mistakes –
1) Many people begin to trade with learning about it. They trade with half or no knowledge at all. This is the biggest mistake that one can make in their trading career as one will not know what they are exactly doing in the market.
2) Many a time’s traders tend to overtrade. A trader should always know his limitations, understand money management, adopt it and stick to it. Never use money which you cannot afford to lose. Also a trader should never borrow and trade. Always keep your risk to less than 2% and risk to reward ratio more than 1:2. One always tends to make more blunders when they are financially under pressure.
3) Trading without a stoploss is the most common day trading mistake. The moment you enter market and create your trading position, the first most important step to follow is to place a Stop Loss Order. This along with money management can protect your money in the long run.
4) Some people tend to trade with divided attention. Day trading is a full time job. It is demanding. It requires undivided attention. It does not like people giving half attention, if you are not attentive with full time commitment you cannot succeed in day trading.
5) At times you might trade when you are emotionally upset, do not do that. Your bad mood can kill your good trades. At the same time be careful when you are elated. Learn to keep all your emotions out of the trading ring. Learn to trade like a robot.
6) Not documenting your trading plan and actions taken during your trading session.
7) Listening to others advice and changing your trading plan.
8) Averaging the losses.
9) Trying to day trade in illiquid stocks.
10) Trying to be in the market all the time.
11) Trying to tweak a successful strategy as per ones whims and fancy, or by creating a mental strategy and putting money on it, without back testing and paper trading. With more experience in the market your list of mistakes will keep growing. It is a good sign. One should learn how to master each as this will help you to become a successful trader.