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10 Common Mistakes New Traders Make PDF
10 Common Mistakes New Traders Make PDF
new traders
10 COMMON MISTAKES
NEW TRADERS MAKE
Trading is a skill and with learning any skill there are pitfalls and missteps along the way. Understanding
that mistakes are part of the process and learning to reduce them could help you develop a more
disciplined, consistent approach to trading.
Here are 10 of the most common mistakes that new traders make.
1. EMOTIONAL TRADING
Nobody can properly prepare a new trader for Golden points out that the emotions you feel
the emotional roller coaster and even the most are an involuntary response to those chemicals.
experienced traders grapple with this after This is part of human evolution, so it must be
years in the business. understood, and then controlled.
Why is it so difficult to control your “You have evolved to avoid pain and
emotions? It may lie in our genetic discomfort and developed a flight
make-up. Matt Golden, market analyst instinct. This is why most traders
for TraderPlanet, discussed the science embrace flight. Flight from the market
of trading and emotions at the VantagePoint (at the worst time), flight from systems
Power User Seminar in Tampa in February. (because of the discomfort of drawdown), flight
from success. This is all normal,” according to
“When you feel emotions while trading, there is Golden.
a physical, chemical reaction that is happening
inside of you. These chemical levels are different However, learning to take the emotion out of
for everyone. This is why trading is different for your trading is integral for long term success.
everyone, “Golden said.
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10 Common Mistakes New Traders Make
2. POOR PREPARATION AND PLANNING
In trading, Winston Churchill’s famous quote, how a business plan outlines the establishment
“Fail to plan, plan to fail” rings especially true. and development of a proposed business in
When you enter the market arena, you detail, a trading plan outlines, in detail, a
had better be prepared. However, few structure for trading.
traders perform the necessary due
diligence before moving headlong Trading plans are fluid in the sense
into the markets. that they are being tested constantly
and amended to improve overall performance
You can’t just walk into the market with a and profitability, but strict observance of the
handful of money and expect to take money rules of the trading plan is often the hallmark of
away from the professionals. If that’s the case, a successful trader.
you’re gambling, not trading. Many who trade
successfully rely on a trading plan. Just like
When you write down your rules everything This changes the dynamic of
changes. Instead of hoping that the mistakes. Mistakes are now not
market is going to do what you want, or about whether you win or lose on a trade.
you wondering if you should just hold Rather, they are about whether you follow
on a bit longer, you go and look at your the rules of your plan. It establishes discipline
rules and they will tell you what to do. in your trading, which is critical to your success.
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10 Common Mistakes New Traders Make
4. A LACK OF OBJECTIVITY
Most traders don’t want to acknowledge that a wants whenever it wants at any time. Many new
trade could turn against them. They enter the traders get into trouble by thinking the market
market assuming they’ll be successful, refusing can’t or won’t do certain things.
to look in the rearview mirror. It’s also
common for emerging traders to use To be objective, you cannot put your
a calculator to predict how much demands and expectations on the
they’ll make and how they’ll spend the market. This doesn’t mean that you
unrealized profits! can’t have an opinion about the market.
It only means that your opinion can just
Entering the market with a neutral as easily be wrong as it is right. And you
attitude is a good approach. You need to need to be completely ready and comfortable
believe anything can happen in the market at for it to be wrong. You need to release yourself
any time. This is what being objective is all from having to be right. The more objective you
about. A profitable trader needs to be thinking are, the less you will distort the information you
constantly that the market can do whatever it receive.
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10 Common Mistakes New Traders Make
Intermarket Analysis
Software
“ When I first considered trading, I was very “ I've tried many systems and talked with more
concerned about how I would be able to fit guru's then I care to admit and as you know, I've
trading into my already hectic schedule. I saw a had the unfortunate experience of wiping out my
huge value in Vantage Point because it was going account a number of times over the years. Today,
to do so much of the work for me evaluating the with the help of VantagePoint I now feel I'm finally
markets using the neural networks. ” - Carey M. on the right track.” - Bill C.
“ I have been using Vantage Point software for three years now and
absolutely feel that this is the best software on the market. ” - Wayne P.
Some people don’t want to use stop All sorts of trading gurus will proclaim
orders when trading because they are caught that use of stop orders is the best chance for
up in thinking that the market will hit their stop achieving long term success. Most traders
orders and then immediately start moving in don’t have enough discipline to get out of their
their direction after they’re stopped out. And losing positions without using stop orders.
you know what? This will happen sometimes.
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10 Common Mistakes New Traders Make
manager”, rather than a “trader”, the best traders Personal psychology influences our thinking and
in the world know that consistent trading profits decisions about money. A trader should never
come as a result of managing risk effectively, so risk money they can’t afford to lose. Certainly,
consider yourself a manager of risk from now no one wants to trade with the goal of losing
on. money but one must be ready and prepared for
such an outcome.
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10 Common Mistakes New Traders Make
10. NOT HAVING A TECHNICAL EDGE
Most trading experts suggest that if you want hood, from a user’s perspective VantagePoint
to trade successfully, you need an edge. What is incredibly easy to use, regardless of
do you know that will give you some degree of whether you’re new to trading or
conviction? Many new traders don’t a highly experienced trader. All of
know the answer to this question, so VantagePoint’s predictive forecasting
they really have no technical edge. capabilities are completely built into
the software and ready for you to use.
But newer traders don’t want their It takes just a few minutes of your time
technical tools to be too complex. each evening to update the software
VantagePoint Predictive Trading Software and pin-point trend changes and trading
can give new traders that needed technical opportunities before other traders even have a
edge. While extremely sophisticated under the clue about what’s about to happen.
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new traders
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10 Common Mistakes New Traders Make