There is really only one reason to trade: to make money. Unfortunately many traders get off track.
Your trading should be ran the same way you would run a business. You are trading to make money, no other reason. Your trading should resemble being in an auction for profit or a market place of goods. If your trading resembles a gambler’s trip to the casino you are on the wrong track. You will lose money, maybe all your money. You must trade with a defined and proven plan, while managing risk, and with as little emotions as possible. If you are just having fun and like the excitement of plunging in and losing money consistently then at least be honest with yourself, it is a hobby not a business, you are just having fun. If you want to make money remember why you are trading and ask yourself is it worth it? In the long term it is possible to make enough money to buy a house, retire, and even be a millionaire, but it is a lot of work like any other business. The question is are you willing to do the work?
Here are the five most dangerous things that traders start to do when they take their eyes off the priority of making money.
- Traders begin to hold trades that are losing in an attempt to prove they are right while ignoring stop losses.
- Traders put on huge trades because they think they have an idea that can’t lose. These may be the most dangerous trades.
- Traders add to a losing trade believing that it can not possibly move against them any more and a reversal is eminent.
- Traders start to trade only for bragging rights even to the point of ignoring losses and talking only about wins.
- Traders trade to prove they are great traders, the priority is their ego not making money.