The Main and Most Dangerous Day Trading Mistakes

How to Become a Amazing at Day Trading

Intraday trading always involves high risks. Due to numerous Forex and stock day trading mistakes, traders quickly lose their capital. Afterward, they are disappointed not only in the market but also in their abilities. Today’s article will help the trader to concentrate on the most important points and get around common trading mistakes.

  1. High expectations

Having unrealistic expectations and not relying on an analysis of the current market situation, the trader will be greatly disappointed by the harsh realities of life. Trading is far from always logical and easily predictable. Therefore, the best thing you can do for successful trading is to follow your trading plan, which clearly spells out possible situations and reactions to them on your part. Be content with what the market offers. Over time, as capital grows, you will be able to increase your position, and this will bring you additional profit.

2. Position averaging during trading

One of the most common intraday trading errors is position averaging. The problem is that the trader “clings” to a losing position, losing not only money but also the time that is no less valuable. Moreover, in order to recover losses incurred after averaging a position, a much larger percentage of profit will be required. Most often, the most profitable option is to close the position and open a new one in the right direction and wait until the losing trade passes.

3. Opening position before a big news

The impact of economic news releases is well known. However, it is not always possible to predict the market reaction to this news. There are also additional statements, small news that come out after the main big news. They can influence market movements very unexpectedly and illogically. Therefore, rushing to place an order right before the big news release looks more like an impulsive act, rather than a thoughtful decision. It is best to wait for a decline in volatility and the formation of a stable trend after the news release.

4. Lack of a trading strategy

The next problem is trading without a system or strategy. Its absence leads to inconsistent actions based on emotions. As you know, human emotions are rather unstable: when a trader loses money, he will be in despair, and when he earns, in euphoria. All this leads to the fact that positions begin to get opened on any grounds, just to feel more comfortable and win back money previously lost.

5. Attempting to trade using multiple strategies

The main thing is stability and discipline. A trader gets in a lot of trouble when jumping from one trading strategy to another. This does not allow us to get a result from systemic actions. Any transaction can be unprofitable or profitable, regardless of its quality. This mistake is similar to the lack of a trading system. For statistically significant results, you need to make at least 100 transactions using one strategy. Thus, you need to choose one strategy and follow it and not change it constantly.

6. Attempting to trade multiple instruments

Another common mistake is an attempt to trade a large number of the instrument. When trading a large number of instruments, the optimal entry points are often missed. The trader runs after the missed opportunity and, as a result, opens a position in less favorable conditions. Alternatively, by analyzing one instrument, the trader misses the moment when it is worth closing the position for another. As a result, instead of a profitable transaction, they get a loss. Choose two to three instruments and focus on them.

7. Trading all day long

It may seem that trading is an easy job that does not require any effort. So, traders often tend to overestimate their strengths and underestimate accumulating fatigue. The first transactions are profitable, and the profit begins to grow while one is still full of energy quickly. As time passes, there is less concentration so that the trader can lose all the profits made earlier. Active trading takes a lot of energy and mental work. This type of fatigue is hard to notice and realize that the brain requires rest. Thus, creating trading time limits is the best solution.

8. Lack of stop orders

A serious problem for the trader is not using stop orders during the trade to fix losses. This does not make it possible to limit the risks because sometimes, you can not have time to react to market changes, regardless of position size. Remember, abnormal movements happen, and you need to take risk management steps to minimize your losses.

9. Big risks

Novice traders believe that if you take big risks, then the profit will be much greater. This is one of the biggest day trading mistakes. Almost all traders (especially those who have not gained experience in trading) who risk a large part of their investment, sooner or later leave the market with nothing. Thus, you should follow the rules of risk management. Experts recommend placing stop orders in such a way as to risk 1% of the total capital. It will help prevent losses that your trading account cannot sustain. A good rule of thumb is that the maximum daily risk should be no more than the average daily profit for the last month.

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Written by:


Carolyn Huntington is an economist, professional trader, and analyst. She made her first big deal in her student years with a profitable investment in Facebook stock. Now the total experience of her trade is 18 years. Over the years of trading, Carolyn has developed its own strategy that allows even those who have never traded on the stock exchange before to earn money. She also creates market forecasts and advises major shareholders, compiles investment portfolios, and teaches how to work with automated advisors.

telephone: 503-547-5192