Trading Mistakes to Avoid

So many people make the cardinal trading mistakes and lose everything - wife, girlfriend, kids, house, the lot. Don't fall into the trap and make the same trading mistakes.

One of the biggest aspects of becoming a successful trader - and most things in life - is that of learning from your trading mistakes. I remember a quote from JP Morgan that has stuck in my head ever since hearing it as a novice trader. Write this down and implant it in your brain for the entirety of your trading journey.

"To be a money master, you must first be a self-master."

Mistakes will inevitably happen in your career as a trader. The same applies to anyone taking on something new. For example, when most people start a new job, they need lots of hand-holding until they are comfortable with their new role. Trading is no different. Unfortunately, most traders don't have that 'somebody' to look over their shoulder; there is no one to guide and correct them when they have made a mistake. The trader, for the most part, needs to look at her own trading patterns and be self-correcting. This can be a tall order, especially when you don't realise you have done anything wrong!

There are two types of mistakes: mistakes you have made and mistakes made by someone else. The fact is, it's human nature to link more pain to the mistakes that you have made yourself as opposed to the mistakes of others. As a result it's easier to learn from your own painful mistakes than the mistakes of others.

Mindful of this, I encourage traders to think of the first one to two years of their trading career as an opportunity to learn from your own mistakes. The more mistakes you make initially, the more you will learn - but only if you consider them as learning experiences as opposed to events you beat yourself up over!

The 2 Biggest Mistakes of My Trading Career

1. Trading Without A Plan

We all know a well-designed trading plan is the essential element of any good trader. The plan is there to instruct you what to do, when to do it and how much to do it with.

In my opinion, unless your plan is written down, you don't have a plan. A plan will make you trade consistently and help you to minimise your losses while magnifying your gains.

2. Trading Without A Coach or Mentor

Ask yourself this: If you want to learn a new language, how would you get started? You would most likely go to a class and learn from somebody more experienced.

In a similar manner, if you wanted to improve your trading skills, you should find a coach. Trading is generally a lonely vocation. What's more, due to the solitary nature, many traders find it difficult to improve their skills.

Coaches are necessary to help you identify where you are going wrong and steer you in the right direction. The fact is, all top performers have coaches. Take Tiger Woods, for example. He's considered the greatest golfer of all time and yet he still has a coach. Why do you think that is?

Coaches are required for those who wish to perform at their peak. I believe five hundred dollars spent on improving yourself through a trading coach is much better than losing $10,000 in the markets. You can guarantee you don't make the silly trading mistakes that so many other successful people before you have.

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