Now if you have been trading for a few months, you will realize that there are very few things that you need to do right to make money.
On the other hand, there are a lot of things or habits you have to avoid if you intend to make consistent profits.
Here are the 3 most common mistakes or bad habits new traders pick up which ultimately lead to their failure.
1) No proper thought out trading plan
Many traders will insist that they have a trading plan all thought up nicely already. Also these same traders will say that they are also in touch with market forces. But the bottom line shows the results! Regardless of what you may say or feel, the truth will e shown in your profit/loss statement. Do you make consistent profits, if you don't make profits then there is something wrong. Usually it means that there is a small but crucial portion that may have been overlooked by the trader. Correct that and watch your profits soar!
2) Lack of discipline
I say this a hundred times, I will say it a thousand times more! Discipline is the most important thing that a trader needs. You don't need a fancy degree, or insider information or knowledge of the newest technical indicator. What a trader needs to succeed is nothing more than then ability to discipline his/her mind and actions. When I say discipline, I mean physical, mental, and emotional discipline. This discipline can be acquired in a variety of ways. We will cover that in another article, but remember traders who do not have the discipline to follow their plan, do not have the discipline to follow their money management rules always end up giving their hard earned money away to the people who have discipline. If you want to succeed in any sort of trading, discipline is a very big must have.
3) Poorly set money management rules
Gunning for the top dollar is all well and good. The thing about looking up at the sky when you walk is that you might miss the hole in front of your feet. That is what usually kills the new trader. The greed level becomes too high and the want for instant gratification blinds all rational thought. Sounds too far-fetched? Ask yourself when you last traded and there was the opportunities for more profit did you ignore all your pre-set money management rules and went for the kill? We if you are like 90% of the traders in the market then you most likely did. This forms a bad habit, regardless of whether you made or lost money. It is worse if you made, as the fleeting success will build on the false promise that betraying your own rules is a good thing. In the long term there will be more failed trades than successful ones. Each time you take a gamble and plunge in, you will only end up poorer.
In conclusion, the above-mentioned 3 points are highly common mistakes or habits that are form when the trader is relatively young. If the trader can safely keep away from these 3 mistakes then you as a trader can highly increase your profits and make trading a way of living.