Many new traders start trading the markets without having any sort of plan. Because of this, many a losing trader just second guess price direction. This is especially true when the position is losing. Inexperienced traders tend to close the winning trades and keep the losers.
Traders are unaware that most of the news they read or hear has already been factored into the price of the market. Jumping into positions based on the morning news is often futile. The market has already adjusted.
After a few wining trades many traders become complacent. Out goes the sound reasoning and fundamentals. In comes the hunches and nailed on dead certs. Goodbye profits.
Bad bank management is a regular occurrence. New traders and even more experienced traders, trade positions too big for their bank sizes; or trade far too often for their bank size to accommodate correctly.
Failure to implement a predefined risk using stop losses, create even bigger losses.
Some traders are only happy trading one side of the market, either up or down. Good traders are happy to trade all sides, up, down and even sideways.
Unable or unwilling to accept a loss costs traders big. Lack of experience in the markets leave traders emotionally attached to trades. Even if the positions keep losing more money. They can’t take a small loss so take a bigger one instead.
New traders go crazy when they start to trade. They trade anything and everything. Online financial bookmakers fuel the situation further.
Traders don’t keep to the rules of a system they are using. This lack of discipline always costs traders. Many traders have a winning strategy in their grasp, only to turn it into a losing system by not following simple rules.
So many traders forget this cardinal rule. Cut your losses short and let your profits run. Instead they take profits to early and stop their losses too late.
If you want to learn how to trade the markets profitably and see your trades turn into winners instead of losers. You can read more here.
“All through time, people have basically acted and re-acted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why formations and patterns re-occur on a constant basis.” Jesse Livermore