With the wild action in the market it is more important than ever for us not do stupid things in our trading. While the market is trying to digest what a socialist president means for France and a Greek political fracture means for Greece’s future in the European Union we need to tread carefully. The market is now trying to price in new scenarios and probabilities for the markets, traders and investors are still stepping in to buy at major supports in this long term up trend. But we are no longer in the Polly Anna first quarter it is time to trade with discipline and focus on finding what is working.

Top Ten Ways for a New Trader to Lose Money

  1. Be stubborn about your opinion  instead of stop losses use hope as an exit strategy.
  2. Trade big, go all in on every trade, believe that your trade just can’t miss.
  3. Buy options out of the money so you not only have to be right about direction but you also have to be right about the time and price.
  4. Don’t do any homework just believe you are special and so damn clever you will win.
  5. Start giving advice to other people on twitter and stock twits even though you do not have a long term winning record.
  6. Go long in a market in correction and short the best stocks in a bull market.
  7. Buy all time lows and short all time highs.
  8. Goal #1 is just to prove you are right.
  9. Instead of having a proven method and a trading plan just ask others for advice.
  10. Trade with no understanding of your risk of ruin or your trades reward to risk ratio.

Competence must come before confidence in trading.