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Article, Trading Education, Trading Psychology, Trading Success

Trading Mistakes and Bad Habits to Avoid

I was recently asked about some of the trading mistakes new traders fall into when starting out.

It was easy to come up with a lengthy list, mainly because I’ve personally made all of these mistakes myself, and in most cases, more than once.

I thought it would be fun to put together a bulleted list of some high-level trading mistakes and bad habits to avoid.

In no particular order, and by no means a complete list:

Trading Mistakes and Bad Habits to Avoid

  • Trading with too little capital (relative to costs of commissions).
  • Overtrading when there is nothing to do (again, damn commissions).
  • Averaging into losing trades when it’s not a part of your original plan.
  • Entering into a trade without an exit plan in mind.
  • Entering into a trade risking more than 1 to 2% of your total capital.
  • Entering into a trade based solely on someone’s tweet.
  • Trading without understanding what edge you actually have.
  • Trading to get back gains (revenge trading).
  • Thinking trading is easy after going on a  winning streak.
  • Thinking the market is out to get you after getting stopped out.
  • Mistaking luck for real skill or edge (very difficult to identify).
  • Blaming anyone but yourself for your losses or performance.
  • Letting outside media or opinions influence your trading strategy.
  • Thinking just because you “are a trader” that you need to trade.

What’s particularly dangerous about this list, and why bad habits is a key phrase, is because doing anyone of these can reward you with a positive short-term outcome.

For example, averaging into a losing trade without it being a part of your original strategy can successfully bail you out of an underwater position.

But over the long run, that behavior is all too likely to come back to rear its ugly head and cause havoc on your account.

The same holds true for many others on this list.

Hopefully this serves as a good reminder to keep up with your sound trading principles, and if you do find yourself routinely doing anything from above, make sure it is something you have a deliberate and rational reason for.

Anything else you want to add? Leave a comment below.

Thanks for reading and good luck out there.


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