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Ericthetrader

The 11 Most Common Mistakes of a Trader Are...

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1. Not Having a Trade Plan...

 

2. Not Having Money Management...

 

3. Not Using Protective Stop Loss Orders...

 

4. Taking Small Profits and Letting Your Losses Run...

 

5. Overstaying Your Position...

 

6. Averaging a Loss...

 

7. Increasing Your Commitment with Success...

 

8. Over Trading Your Account...

 

9. Failure to Take Profits from Your Account...

 

10. Changing the Trade Plan Mid-Trade...

 

11. Not Having Patience

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Dear Erichetrader (MMS)

Lets assume, as a trader,you have covered all your 11 points.

You've got the plan, the money management, the stop, the exit , blah,blah, blah.

And you are still loosing money!!!!!

Something is missing??

UNDERSTANDING that you can loose 10 times in row before you win.

And with so many losses , all small ,because you have covered all 11 above points,you now look for a new method.

Back to square one!!! NEW PLAN

The Turtles went for months of losse before a win.

Please add number 12 Perserverance with your chosen method

Read "The Ultimate Trading System" by J Hill for more info.(1999)

You can download it for free from 4Shared .com

regards

bobcollett

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Eliminate the impulse trade and the profits seem to magically appear.

 

I'd turn those 11 mistakes into positive action steps...

 

1. Create and follow a trading plan.

 

2. Employ strict money management rules.

 

3. Place a stop on every trade.

 

4. Cut your losses quickly, let your winners run patiently.

 

5. Don't get piggy. Many small, but consistent winners build emotional capital.

 

6. Never add to a losing position.

 

7. Earn your way to trade more contracts/shares.

 

8. Never risk more than 1.5% per trade.

 

9. At the end of each week withdraw all profits from the week, physically touch the cash, and deposit them into a savings account.

 

10. Never break rules. Breaking your rules will cause you to fail.

 

11. Patience Pays.

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Patience is definitely critical because it cuts across so many aspects of trading. It doesn't just apply to the obvious things regarding the trade itself and the series of trades, staying with the plan, etc. But it also applies to some of the more mundane aspects to trading like, screen time. That's where experience comes from. Just being able to remain focused and undistracted requires patience. Discipline requires patience. Waiting for the setup.. Letting the trade develop.. Not being tempted to quit too soon.. or to jump the gun on a trade, or the rules of your trade.. practicing your physical executions require patience.. Patience is huge!

 

I would also add to the list of mistakes, the whole concept of creating a strong foundation. Most traders don't do it. It is laborious, requires patience, commitment, time, and a certain level of skill unto itself. To me, a foundation is all about having a longer term vision and knowledge as to what your tradeplan has produced in the past so that you can have 'confidence' in what it might achieve in the future, if you can execute it the same way. This takes practice. I would venture to say again, most traders don't do this.

 

I spend a lot of time with my win/loss column of my tradelog (spreadsheet) before I take a real money trade. I want to know how many times my plan had a 4 trade losing streak for example, over the last several hundred trades. What about 5 losses? Winning streaks? I want to see a growing equity curve based on the results of my practice trades despite the occasional losing streaks and tough sessions. This, to me, is foundational work that is critical to success.

 

How can I not be emotionally attached to the trade? Can I take the next trade according to my plan? These questions I need to be able to have good answers to before I commit real money. If I did my foundational work, which includes a good amount of mistake free practice executions of my tradeplan, then I will be able to approach my trading with the confidence necessary to make hard, real time decisions at the right edge of the chart.

 

A good foundation is all about prep work. Like a great meal. You gotta prep the ingredients before the recipe can come together. I think everything on the list so far is valuable and essential. But without confidence to stay with a well proven plan, it's all moot. You gotta be able to show up tomorrow to take the next trade, or what difference does any of it make? No foundation means no firm footing, which means mistakes, emotional human decisions that are bad for your trading, bad habits in general, and a circle back to square one, over and over again. You gotta have a well constructed foundation to build a successful anything, including and especially a successful trading business.

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A good foundation is key, without it you will end up trading erratic and inconsistently, at the same time there's no better value than experience and the more you trade and more screen time you have the more in tune with the market you will become.

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Please add number 12: Perseverance with your chosen method

 

Read "The Ultimate Trading System" by J Hill for more info.(1999)

You can download it for free from 4Shared .com

 

Thank you Bob for the download link.

 

The actual name of the Book is:

 

The Ultimate Trading Guide ... not "system."

 

I did a google search for it and was able to correct the error and get the right book.

There is another .pdf file called The Ultimate Trading System, though it is a dangerous document for newbies, so please don't bother with that one.

 

Cheers

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