I am sure that if you have traded before you have made at least one of these dumb mistakes at some point in your trading career. It is very easy to avoid the mistakes by developing a few simple habits.
Buy or Sell, Which Button Was That
It is not unusual for a trader to push the wrong button when entering or exiting from a trade. It is most common to push sell to get out of a short position, when you really meant to buy. Sometimes it just gets so confusing, so instead of being out you end up with double the quantity.
When you place a trade immediately check your open positions. By doing this you will pick up the mistake before it costs a significant amount of money. Not realising that you have an open position can be far more expensive.
Forgotten Stops
You may not like the price action and decide to exit your trade. If you do make sure you cancel your stop loss order. The stop order you placed when you entered the position will still be sitting there waiting for the market to move to the stop price. If you leave the order open it could be traded many hours later and the outcome of the trade is unknown. Trading is not about luck, it may move in your favour, but about discipline to follow your strategy.
Before exiting the trading platform at the end of a trading session make sure you check your open positions match your stop loss orders to avoid any surprises when you next enter your trading platform.
Zeros Don't Mean Nothing
While it is possible to get the maths wrong when calculating your position size it is far more common to get the number of zeros wrong when you place the trade. An extra zero means your risk increases by a factor of 10 times and forgetting a zero reduces your profits to 1/10th.
By going to your open position order screen you will be able to pick up whether the order you placed was correct.
Tight Stops Create Losses
To avoid losing money many traders will reason that a tight stop will protect them, but placing a stop loss too tight can result in the trader being exited prematurely from the trade. The trader has created exactly what they wished to avoid.
When you decide where to place your stop order you must place it far enough away from the price to avoid getting caught up in the normal range of movement. Place it where it will only be hit if your view turns out to be wrong.
Follow The Rules
The last common CFD mistake is to enter a trade when you know that you should not. It is common for new traders to chase a share and jump on board after the share has been moving, however they will quickly learn the error of their ways. A beginner has an excuse, they do not know any different, but even more experienced traders are caught in this trap.
The market offers an unlimited supply of trading opportunities, far more than you could ever possibly trade. If you miss a trade today, there will be another trade along soon enough. By following a trading plan you can avoid getting caught by impulsive trades, which can prove to be costly.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability. - 22871
Buy or Sell, Which Button Was That
It is not unusual for a trader to push the wrong button when entering or exiting from a trade. It is most common to push sell to get out of a short position, when you really meant to buy. Sometimes it just gets so confusing, so instead of being out you end up with double the quantity.
When you place a trade immediately check your open positions. By doing this you will pick up the mistake before it costs a significant amount of money. Not realising that you have an open position can be far more expensive.
Forgotten Stops
You may not like the price action and decide to exit your trade. If you do make sure you cancel your stop loss order. The stop order you placed when you entered the position will still be sitting there waiting for the market to move to the stop price. If you leave the order open it could be traded many hours later and the outcome of the trade is unknown. Trading is not about luck, it may move in your favour, but about discipline to follow your strategy.
Before exiting the trading platform at the end of a trading session make sure you check your open positions match your stop loss orders to avoid any surprises when you next enter your trading platform.
Zeros Don't Mean Nothing
While it is possible to get the maths wrong when calculating your position size it is far more common to get the number of zeros wrong when you place the trade. An extra zero means your risk increases by a factor of 10 times and forgetting a zero reduces your profits to 1/10th.
By going to your open position order screen you will be able to pick up whether the order you placed was correct.
Tight Stops Create Losses
To avoid losing money many traders will reason that a tight stop will protect them, but placing a stop loss too tight can result in the trader being exited prematurely from the trade. The trader has created exactly what they wished to avoid.
When you decide where to place your stop order you must place it far enough away from the price to avoid getting caught up in the normal range of movement. Place it where it will only be hit if your view turns out to be wrong.
Follow The Rules
The last common CFD mistake is to enter a trade when you know that you should not. It is common for new traders to chase a share and jump on board after the share has been moving, however they will quickly learn the error of their ways. A beginner has an excuse, they do not know any different, but even more experienced traders are caught in this trap.
The market offers an unlimited supply of trading opportunities, far more than you could ever possibly trade. If you miss a trade today, there will be another trade along soon enough. By following a trading plan you can avoid getting caught by impulsive trades, which can prove to be costly.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability. - 22871
About the Author:
Jeff Cartridge started trading CFDs in 2002 when they first launched in Australia and co-created the website LearnCFDs.com Learn the Foundation of Successful Trading CFD Trading Strategy
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