There are many things that a trader can do wrong, but some are worse than others and can even reduce or make you lose all of your profits. Some of them are common mistakes that stand out like a sore thumb, other are silent killers. Be they glaring mistakes or silent ones, they contribute to your losses ultimately. Here are the top 3 worse habits that kill a trade:
First is the emotional trader, when ever the trade starts to turn against this trader, the emotional trader lets lose all feelings. I am not talking about weeping and wringing of hands instead this trader would be angry, hurt and scared. Should the trade lose there is a high possibility that the second trade would not follow the money management rules or the trading plan. Or if the trade goes so badly, the trader refuses to cut losses and run, instead the trader would stoically look as the trade hits the stop loss. Loyalty is all well and good, but sticking to your guns when the trade dies is a little too extreme, do that often enough and it hastens the death of your account. Every pip adds up you know.
Second is that the trader becomes too focused and forgets to diversify. This is pretty much like putting all your eggs into one basket. When that happens all it takes is one bad trade to set you back. Have a series of bad trades and you are completely wiped out. While it is good to focus your resources on the highest certainties, understand that there is no guarantee in the markets. The highest probability trade can (and often it does) turn against you at the strangest times. So many times I had a trade that was almost close to my profit target just missing a single pip, suddenly without reason the trade reverses and hits my stop loss, only to revert to where it was seconds later. Now if that was my only opened trade, that would mean that I am in a loss position. Now if I diversify my position I might lose one trade but then win the other. In that manner I break even and I have the capital to carry on trading. If things go well I win both trades (highly possible) that means I have advanced faster with safety.
Third is the lack of discipline, a lack of discipline in your trading kills your account faster than you can blink. There is so much to be said about a disciplined trader, and a trader with little discipline. A disciplined trader would ensure that the trading plan is followed closely. Entry and exit points are kept to strictly and money management rules are followed. The discipline would only allow trade to take place if all the indicators point in the right way. If there is even one just one indicator that is out, then the trade does not take place. Discipline in your trading will separate a profitable trader from a trader who is in danger of having an account wipe. Discipline in money management gives an advantage to the trader by ensuring the account is grown steadily and consistently. The key to making money in Forex is not large gains, but instead it is the small consistent wins per trade that finally build up. Imagine a stream, the stream flows down the side of the mountain, and soon it is joined by other streams, then they form a huge river, which rushes out to sea. This is what discipline trading will give to you. Your consistent profits will be like little streams that finally become a huge flood of money!
Dr. Joshua Geralds is a successful Investment Specialist with over twenty years experience increasing the income of people world wide. Visit http://www.pipsalot.com to learn how to make steady profits through safe trading and down load your FREE e-book "Money Management" for a limited time only! |
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