Good trading is very basic; it’s trading with an edge to capture a trend in your own time frame, while managing your risk exposure carefully with the right position sizing and stop loss.
There are endless ways to trade badly. You can change these if you make an effort and become self-aware. Be on the lookout for these pitfalls.
Here are the top 20:
- Angry trading: When you trade angry and want to win from the time you enter to the time you exit, you get angrier and make mistakes if your trade goes against you.
- Loose trading: You trade too big, you stay in losing trades too long, you chase trades after the entry has passed, and you shift from discipline to opinions.
- Tight trading: You set stop losses too close, you trade too small, or you exit winning trades too quickly.
- Aggressive trading: Trading too big on every entry with an all or nothing mentality. You think each entry is a great trade, and you try to maximize your gains by risking large losses through big position sizing.
- Passive trading: You have no strategy for entries or exits. You chase the price action any way it goes with no defined strategy.
- Over trading: You take more trades than you really should, causing excessive commissions. Over trading is caused by boredom and the fear of missing out.
- Entitlement trading: You believe the market owes you money because of the effort you have put into your trading system. You view losses as unfair.
- Annoyed trading: Each loss causes you to be frustrated. The more times you lose, the more erratic your trading becomes as you search for trade entries with no edge.
- Biased trading: You believe so strongly in the direction of the market you become blind to the fact that you are wrong. You begin to filter everything through your bias so you can maintain your belief in market direction, even when all the evidence is against you.
- Injustice trading: You believe that they are out to get you. They went after your stop, they are idiots, they are out to cause you to lose. Schizophrenic trading.
- Frustration trading: You can not make good decisions because the price action frustrates you.
- Sloppy trading: You don’t do your homework. You are disorganized and have no trading plan or system.
- Revenge trading: You trade with the belief that the market owes you money. It skews your perspective and gives your trading a bad motivation.
- Underfunded trading: You trade with an account so small that commissions are a high percent of your account. You trade too large in an attempt to grow your money fast and blow up your account.
- Shame trading: You are embarrassed to trade because you were to confident and vocal about trades that went sideways.
- Distracted trading: Your trading is low on your priority list and you easily lose your focus.
- Scared trading: You have trouble entering your trades because you are afraid of losing trades.
- Envy trading: You get demoralized by someone else’s great trading that you find it hard to trade your own system.
- Demolition trading: You feel unworthy of trading success and money so you subconsciously trade in a way that destroys your account and helps you fulfill your prophecy.
- Trading with no edge: Your trades and results are random. The money you make through luck are given back during unlucky streaks.