Learning From Failure - 6 Trading Mistakes Even the Pros Make

Author: George Davis

Mistakes professional traders make

Trading is a trial-and-error practice, one that isn’t free from mistakes. However, there is value to making mistakes. A wise saying goes that a mistake that teaches you new tricks is a mistake well-made. Be a smart trader and learn from others’ mistakes rather than repeating them, and this is only possible when you study those mistakes and know what to avoid. Hence, we have listed six trading mistakes even the pros make to help you avoid failure and the remorse that follow it.

6 Mistakes Professional Traders Make

Traders are the merchants of futures, and making mistakes in this process is expected. However, you can leverage these fallacies and try to avoid them.

1. Swapping Strategies after Losing 5 Trades in a Row

Losing is inevitable in trading, and changing your strategies after a few short-comings will mangle your learning curve. Most traders focus on minimizing losses rather than avoiding failure.

2. Not Analyzing Market Trends

A sudden market collapse or an unexpected news release can happen any minute. Meticulously crafting your trading strategy and being aware of the dynamic market trends is integral to trading. If a single trade can wipe out your account, you haven’t done your homework correctly.

3. Not Speculating the Future

As a buyer of futures and an investor in the present, you must have data and numbers to speculate what’s to come. What follows your trading session depends on how well you have mapped out your next trade.

4. Allowing Hindsight To Influence Trade Strategies

Most traders beat themselves up for having bad timing. They either regret exiting too soon or not earlier. Each trade has a unique outcome; hence, remember that you can’t predict everything. Allowing your hindsight to influence your strategies is the worst mistake you can make.

5. Not Understanding Difference between Long-Term and Short-Term Trades

Anything can happen in a short-term trade, and you can’t predict every outcome. Although the payout is quick in a short-term trade, it’s riddled with unprecedented situations and ambiguities. Trading with a long-term perspective eliminates chances of exiting too soon, and you are focused on a goal. If your trading strategy has a positive expectancy, don’t go back on your plans just because the market has a false hype.

A graphical representation of stop-loss order

6. Not Using a Stop-Loss Order

A trader’s primary role is that of a risk manager. Managing risk is above all else, and using a stop-loss order is the best way to prevent any financial blows. Most novice traders use a “mental stop,” a predetermined price believed to be the best position to exit the market. A large unpredicted loss is a beginner’s mistake most traders make, which is easily avoidable.

The Bottom Line

Mistakes and miscalculations are a part of trading, and the sooner you realize this, the better. However, this doesn’t mean that you should continue to lose money. There is a vast difference between losing a trade and incurring losses. Mitigating losses by making a swift exit from a crashing market is only possible when you have learned the ropes of the trading world.

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