1) Not using stoploss
Really common problem mainly happening to begginers. It is occuring when they believe that every trade is going to be profitable. By that reason, they do not actively control their losses, what is the only thing in trading that can be regulated. By the way, the amount of profit is not regulable.
2) Moving you stoploss lower while losing money
Advanced traders often move their stoplosses lower. They do that when the market goes against them and they want to give the market more space. By this fact, they degrade their money management and put their calculated rewards of their strategy in danger. Stop-loss should be like a wall that stops you.
3) Cutting your positions prematurely in profit
If the trade goes to profit, we tend to close the position prematurely, because we are afraid that we will lose our gains. It is similiar to the problem with stoploss, so we are ruining our strategy management accordingly.
4) 100% True
Nobody likes to lose. In school, in our job, even during our casual life we try to make everything perfect even though we are doing it for the first time. The losses are a part of the strategy during trading and “being right” all the time makes us emotionally exhausted.
5) Not having a trading plan
To be able to deal with our losses, we need a trading plan. A huge amount of traders immeditately jump into real trading without doing any backtests of their strategy. Moreover, backtests can significantly help us with our emotions during worse periods of our trading plan.
6) Trying to realise massive profits
You can not cook a soup just from pure water. Trying to do massive gains like 1000% a year is really close to that quote. Each of us wants to make big bags of money with just small amounts of initial investements. However, trading is not that much different from classic business you know. It is a really serious business, where you have to make setups for quite conservative annual profits. Otherwise, you create unreal targets. Some traders also risk a big amount of their equity just for one trade. They try to valorize the account for tens of percent a trade, but each loss cuts a big amount of account equity and getting it back becomes gradually more difficult.
7) Trading a style that doesn’t suit you
If you don’t like quick action and you can’t decide critical stuff in seconds – don’t try scalping or other quick trade strategies. The common problem even for really advanced traders is the fact that they try to trade styles that does not fit their character and skills.
8) Searching for the holy grail
After few lost trades we tend to search for a mistake or we are trying to change our trading plan without backtesting the problem in previous time periods. It makes us cycle in a loop where we have even worse self-confidence and we are looking for something that will make money 100% of the time.
9) Underestimating psychology
Psychology makes up to 90% of the success. You can lose big amounts of money even with the best trading plan. If you can’t control your emotions, you will often trade implusively and under the impact of emotions, that can never lead to a consistent winning scenario.
10) Lack of patience
Entering a trade with a precision is also an important skill. Trading is mostly about waiting for the best setups. And the mentioned “boredom” that accompanies this waiting is really dangerous, because it misleads us from trading our defined strategy.