Trading mistakes you are making in your career
If you are one of the many traders who find themselves hitting a brick wall when trading then this article is for you. Learning from our trading mistakes and actually making permanent changes from what we’ve learned, is the key to making consistent money in the markets. If you don’t learn from your mistakes, you are going to be like a hamster that is continuously running on a hamster wheel but never actually going anywhere.
Acquire the right trading mindset.
Everyone says that ‘emotions are the enemy’ of trading success and similar anecdotes. This can often be too general
First off, emotions are not all bad in the trading realm, in fact, they can be helpful and very enjoyable sometimes. once you have developed a solid trading regime, you will eventually develop a sort of internal ‘early-warning’ system when a trade isn’t right, in other words, your fear kicks in, in a good and helpful way. However, fear can also hurt you if you become afraid to take a perfectly good trade setup, etc. So, as we can see, one cannot simply say that “emotions are all bad” when it comes to trading.
If you allow your emotions to influence you in a negative way is what can make them dangerous, not the actual emotion itself. Being conscious and aware of your emotions as you trade will allow you to make adjustments and take control of your actions in the market. Most trading mistakes are born out of letting emotions influence us negatively, so if we are more self-aware of our emotions as we trade, we can work to make sure they are not influencing us to stray from our trading plan.
Learn proper money management.
If you are repeatedly risking too much per trade, emotionally you are going to be feeling on edge, providing the trades do well you may feel a brief relief but in general, your emotional health will be up and down. Money management is one of the biggest keys to remaining calm and collected and not letting emotions negatively influence us as we trade.
Money management is vital for control, as a result, I view money management as the foundation of a proper trading mindset because if you aren’t always worried about how much you ‘might’ lose on a trade, you won’t let emotions affect you negatively.
You have to risk an amount per trade that will not cause you emotional ‘pain’ if the trade loses, this is the only way to survive a losing trade.
If you risk too much per trade, you open yourself up to committing the same trading mistake again; because you will be feeling frustration and anger from losing too much money, resulting in making impulsive decisions to try and make that money back. This is a vicious cycle that will continue until you figure out what dollar amount per trade you can comfortably risk.
Change how you think about trading.
Redefining the meaning of ‘trading success’ can make it easier to make better decisions especially if you don’t have unlimited funds to trade with.
You have to take a slowed-down and longer-term approach to trading and to what you view as ‘successful trading’. Let me ask you this, if you had just one or two winning trades per month and say one loser (3 trades total), rather than 30 trades where over half were losers and some of your winners were little, insignificant ones, which result would you consider to be ‘successful’? Probably the first one right? Well, that’s right, it would be the first one because if you took just three trades in a month, rather than 30, that tells me you were being patient, disciplined and strategic in your trading approach, rather than impulsive and random.
A rich, successful trader who can take on big amounts on every trade he or she takes is naturally going to be much more interested in finding one or two very high-probability and obvious trade signals per month, rather than trading every day.
This is because they know they are going to make a lot of money due to the big position sizes they can trade, they know that one or two good winners a month is all they need to make a lot of money, so they aren’t concerned with trading a lot, only with finding good trades. This is how you SHOULD think and what you should DO in the market, even if you have a small account.
You should do this because trading less frequently but more accurately is how the pros trade and it’s the only real way to avoid losing money by over-trading which results in whittling down your trading account to nothing. Keeping in mind that proper trading is the goal…that IS successful trading, EVEN IF you’re not currently trading big enough size to make ‘a lot’ of money.
Make a plan and stick to it.
Finally, learning from your trading mistakes is one thing, but you have to actually USE what you’ve learned in order to better yourself in your future trades. Making a conscious effort to avoid those mistakes in your next trade. Take what you’ve learned and put it into your trading plan and read that plan every day. Often, the only way we can get off the ‘hamster wheel’ of trading mistakes, is by constantly being aware and monitoring ourselves so we don’t make those mistakes again.