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  • No trader gets it right every time.

  • But you can improve your chances by knowing what pitfalls to avoid.

  • Here are five mistakes to steer well clear of.

  • Technical analysis, advanced charting systems, automated algorithms - all can enhance your trading.

  • But blindly following a software program can often be a recipe for disaster.

  • Remember, these are just tools, not foolproof strategies.

  • It's important to understand the underlying concepts behind the trends and patterns,

  • before placing any trades.

  • Timing is not an exact science, but inexperienced traders will often act at the wrong moment.

  • You can improve your timing by keeping a detailed trading log to track your previous mistakes,

  • using charts to help forecast scenarios and sticking to a clear trading plan to

  • stop you acting on impulse.

  • You may convince yourself a market can’t fall any further,

  • yet one of the most dangerous misconceptions is thinking you can always turn running losses into profit.

  • Knowing when to cut your losses is a key skill to develop.

  • Look back at your trading log, refer to your trading plan, and work out how much youre

  • prepared to lose before you trade.

  • Then place stop-losses to make sure you exit when planned.

  • When it comes to trading, there’s no such thing as a ‘winning streak’.

  • With the euphoria that comes with a big win, there’s a temptation to believe youre on a roll.

  • But you should never let the excitement cloud your judgement.

  • Sit back, consider your trading strategy, and only open a new position if it fits with your plan.

  • The experienced trader should always be aware of what’s at stake.

  • To find the risk/reward ratio of any trade, compare the amount of money you could lose

  • to the potential reward. So if youre risking £200, but you stand

  • to win £400, then the risk/reward ratio is 1:2.

  • What ratio you decide to go with depends on your risk appetite, but generally novice

  • traders should stick to low-risk, high-reward trades.

  • So remember, always keep these five mistakes in mind before placing your next trade.

  • And focus on trading with your head, not your heart.

No trader gets it right every time.

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B1 UK trading reward ratio risk trader trade

Common trading mistakes

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    Jerry posted on 2017/11/01
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