9 Stupid Trader's Mistakes by Van K. Tharp
[info_block align="right"]And if you don't have your trading rules written down, then every trade you make will be an error[/info_block]
Everyone makes mistakes and traders are no exception. Experienced traders make mistakes less often, while beginners make them much more often.
What is a mistake? It is not following your own rules. And if you don't have your own rules written down, then every transaction you make will be a mistake. This is what Dr. Van C. Tharp, author of 11 books on the psychology of trading and founder of the Van Tharp Institute, a company that provides support for the development of traders, claims.
He described nine of the most common mistakes of traders, knowing about which, you can not repeat them.
Mistake #1. Not having your own written rules
As soon as you break one of the rules you have written, you will immediately make a mistake. But the biggest mistake will be if these rules are not written by you. In this case, any action you take in the market will be a mistake.
Mistake #2. Forgetting about the psychology of trading
Trading on 100% consists of psychology and beliefs. It is these, not terminal, a currency pair and a trading strategy are the basis of trading. A trader does not trade on the market - he trades on his beliefs about the market.
Mistake #3. Treating trading as a hobby
Trading on the foreign exchange market is not an easy job. It is a business that requires constant learning in order to succeed. Treating foreign exchange trading as a business will allow you to:
- overcome their psychological problems;
- develop your trading plan, which you will strictly adhere to;
- study other types of markets and develop strategies for trading in them;
- achieve trading results with a ratio of 1 error per 20 trades.
Mistake #4. Lack of clear goals
We can't be led astray - we don't care where we go. Forget it. Set clear and achievable goals - that's half the process of creating your trading system.
Mistake #5. Failure to understand the different phases of the market
According to the price movement, the market can be in several states. These are uptrends, downtrends, flat, high and low volatility. Create trading strategy to any one state of the market is quite simple. However, it is a big mistake to assume that the same strategy will work in different market states.
Mistake #6. Not doing any work on mistakes
Analyzing the mistakes you've made will allow you to avoid repeating them. Learn from your own mistakes, don't step on any rake. Take precautions to minimize their impact on you.
Mistake #7. Not paying attention to your inner state
We are all human beings with our emotions and feelings. Undoubtedly, there are many methods to exclude their influence on trading. But in order to do so, you must be clearly aware of them. A big mistake is trading under the influence of unconscious feelings and emotions.
Mistake #8. Lack of understanding of Money Management rules
How many traders have lost their deposit by opening a 100% profitable deal with a volume, as traders say, "for the whole cutlet"? The desire to gain huge profits makes you forget about everything. That's why it's important to have clear goals, under which you need to develop your optimal rules Money Management and not to deviate from them under any circumstances.
Mistake #9. Failure to understand that trading is a statistical process
If you can understand trading through probability and distribution theory, then you can estimate the probability of success and develop plans to help you achieve your goals.
Remember, mistakes have a huge impact on your trading. Forewarned is forearmed. If you haven't done so before, write down your rules now. Don't make the same mistakes, and your profits will be waiting for you.