Trader Mistakes, or How Not to Lose Your Deposit

Trader Mistakes, or How Not to Lose Your Deposit

1. Trading on a real account in an unfamiliar trading terminal — losses due to lack of knowledge of the software is a pointless loss of money.
2. Taking trading lightly — nothing should distract from trading in the market. Communication with family, responding to messages on social media, entertainment, and important tasks should only start after leaving the trading terminal.
3. Testing hypotheses and new trading strategies on a real account — all experiments are conducted on a demo account. A real account is intended for trading according to a tested strategy.
4. “Floating” risk in different trading instruments — the “money” risk should be the same in each trade. When calculating the trading position volume, the volatility of the stock should be taken into account.
5. Trading in a tilt state — the desire to “recoup” losses from a large loss or a series of negative trades usually leads to catastrophic consequences. After a significant drawdown in the trading account, a break from trading is needed, the last trades should be analyzed, and mistakes should be worked on.
6. Trading based on mechanical trading systems and patterns — a large number of traders are convinced that technical analysis models and signals from programs generating trading signals are the key to success. Unfortunately, this is not the case. Regular profits can only be made by exploiting inefficiencies in the stock market.
7. Lack of discipline — neglecting the rules of the trading system, unjustified increase in trading position volumes, and emotional trades lead to the loss of the deposit. A trader should have a step-by-step instruction that outlines: reasons for entering the market, the algorithm for calculating the trading position, rules for risk management and profit-taking.
8. Evaluating a trading system based on short-term results — a professional trader does not need to predict the outcome of the next two, three, or ten trades, because in the long run, this does not matter. He knows that by following all the rules, his trading system, due to positive expectancy, will ultimately provide the only possible result — profit.
9. Trading without considering the news background — news and moods in the trading community affect not only the broad market index but also the charts of individual stocks. By analyzing the news background and tracking the most discussed stocks, a trader can find great trading opportunities or protect himself from financial losses.
10. Reluctance to adapt to changes — financial markets are constantly changing and evolving, so a trader must constantly search for new inefficiencies. Those who refuse to adapt to new conditions risk repeating the fate of scalpers, pushed out by HFT algorithms.