1. Many futures traders trade without a plan. They do not define specific
risk and profit objectives before trading. Even if they establish a plan, they
"second guess" it and don't stick to it, particularly if the trade is a loss.
Consequently, they overtrade and use their equity to the limit (are
undercapitalized), which puts them in a squeeze and forces them to liquidate
positions.
2. Usually they liquidate the good trades and keep the bad ones. Many traders don't realize the news they hear and read has, in many cases, already been discounted by the market.
3. After several profitable trades, many speculators become wild and give up being conservative. They base their trades on hunches and long shots, rather than sound fundamental and technical reasoning, or put their money into one deal that "can't fail."
4. Traders often try to carry too big a position with too little capital, and trade too frequently for the size of the account.
5. Some traders try to "beat the market" by day-trading, nervous scalping, and getting greedy.
6. They fail to pre-define risk, add to a losing position, and fail to use stop loss.
7. They frequently have a directional bias; for example, always wanting to be long.
8. Lack of experience in the market causes many traders to become emotionally and/or financially committed to one trade, and unwilling or unable to take a loss. They may be unable to admit they have made a mistake, or they look at the market in too short a timeframe.
9. They overtrade.
10. Many traders can't (or don't) take the small losses. They often stick with a loser until it really hurts, then take the loss. This is an undisciplined approach...a trader needs to develop and stick with a system.
11. Many traders get a fundamental case and hang onto it, even after the market technically turns. Only believe fundamentals as long as the technical signals follow. Both must agree.
12. Many traders break a cardinal rule: "Cut losses short. Let profits run."
13. Many people trade with their hearts instead of their heads. For some traders, adversity (or success) distorts judgment. That’s why they should have a plan first, and stick to it.
14. They fail to pre-define risk, add to a losing position, and fail to use
stops.
2. Usually they liquidate the good trades and keep the bad ones. Many traders don't realize the news they hear and read has, in many cases, already been discounted by the market.
3. After several profitable trades, many speculators become wild and give up being conservative. They base their trades on hunches and long shots, rather than sound fundamental and technical reasoning, or put their money into one deal that "can't fail."
4. Traders often try to carry too big a position with too little capital, and trade too frequently for the size of the account.
5. Some traders try to "beat the market" by day-trading, nervous scalping, and getting greedy.
6. They fail to pre-define risk, add to a losing position, and fail to use stop loss.
7. They frequently have a directional bias; for example, always wanting to be long.
8. Lack of experience in the market causes many traders to become emotionally and/or financially committed to one trade, and unwilling or unable to take a loss. They may be unable to admit they have made a mistake, or they look at the market in too short a timeframe.
9. They overtrade.
10. Many traders can't (or don't) take the small losses. They often stick with a loser until it really hurts, then take the loss. This is an undisciplined approach...a trader needs to develop and stick with a system.
11. Many traders get a fundamental case and hang onto it, even after the market technically turns. Only believe fundamentals as long as the technical signals follow. Both must agree.
12. Many traders break a cardinal rule: "Cut losses short. Let profits run."
13. Many people trade with their hearts instead of their heads. For some traders, adversity (or success) distorts judgment. That’s why they should have a plan first, and stick to it.
very very true.......
ReplyDeletethank you sir for your comment.
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