Silly Mistakes CFD Traders Make
There are certain silly mistakes that all traders have made at some point in their trading careers, even though there are simple techniques that can be used to avoid them.
Is it Buy, Or Sell
Maybe you have pushed the wrong button when you try to exit from a position. Pushing buy instead of sell is quite common, especially if you trade rising and falling markets. This is most common on the exit and rather than getting out of the trade you end up with twice as much.
When you place a trade immediately check your open positions. By doing this you will pick up the mistake before it costs a significant amount of money. Not realising that you have an open position can be far more expensive.
Remember Your Stops
Often a trader will decide to exit a position at market, because they do not like the current price action. But if they have the discipline to always use stops then the stop order must be cancelled after the trade is exited. If it is left open the order can be executed and it could be many hours before you realise that this has happened. The trade may or may not go in your favour, how it plays out is an unknown, but certainly not something you want left to chance.
When it comes time to close your trading platform look at both your open positions and also check your live or working orders. Make sure there is a match between the two to ensure you are not surprised next time you go to trade.
Oops, Too Many Zeros
While it is possible to get the maths wrong when calculating your position size it is far more common to get the number of zeros wrong when you place the trade. An extra zero means your risk increases by a factor of 10 times and forgetting a zero reduces your profits to 1/10th.
Checking your open position after the order is placed should enable you to pick up this error as the size of the position will be very different to your normal trading size.
Tight Stops Create Losses
If a stop is placed too close to the current price, it is very likely that the stop loss will be triggered by normal price movement. While the trader that places a tight stop is attempting to avoid losing money, this is often the end result of their actions.
When you decide where to place your stop order you must place it far enough away from the price to avoid getting caught up in the normal range of movement. Place it where it will only be hit if your view turns out to be wrong.
The Ultimate Mistake
The last common CFD mistake is to enter a trade when you know that you should not. It is common for new traders to chase a share and jump on board after the share has been moving, however they will quickly learn the error of their ways. A beginner has an excuse, they do not know any different, but even more experienced traders are caught in this trap.
But remember that there are an endless number of trades available, literally more possibilities than you could imagine and if you do not trade now, there will always be another opportunity. Using a checklist to make sure all your setup and entry criteria are in place is one way to avoid the impulsiveness that can be so costly in the markets. Stick to your strategy.
While no trader will be right every time, these silly mistakes can be easily avoided or caught before they have any real impact on your account. - 23217
Is it Buy, Or Sell
Maybe you have pushed the wrong button when you try to exit from a position. Pushing buy instead of sell is quite common, especially if you trade rising and falling markets. This is most common on the exit and rather than getting out of the trade you end up with twice as much.
When you place a trade immediately check your open positions. By doing this you will pick up the mistake before it costs a significant amount of money. Not realising that you have an open position can be far more expensive.
Remember Your Stops
Often a trader will decide to exit a position at market, because they do not like the current price action. But if they have the discipline to always use stops then the stop order must be cancelled after the trade is exited. If it is left open the order can be executed and it could be many hours before you realise that this has happened. The trade may or may not go in your favour, how it plays out is an unknown, but certainly not something you want left to chance.
When it comes time to close your trading platform look at both your open positions and also check your live or working orders. Make sure there is a match between the two to ensure you are not surprised next time you go to trade.
Oops, Too Many Zeros
While it is possible to get the maths wrong when calculating your position size it is far more common to get the number of zeros wrong when you place the trade. An extra zero means your risk increases by a factor of 10 times and forgetting a zero reduces your profits to 1/10th.
Checking your open position after the order is placed should enable you to pick up this error as the size of the position will be very different to your normal trading size.
Tight Stops Create Losses
If a stop is placed too close to the current price, it is very likely that the stop loss will be triggered by normal price movement. While the trader that places a tight stop is attempting to avoid losing money, this is often the end result of their actions.
When you decide where to place your stop order you must place it far enough away from the price to avoid getting caught up in the normal range of movement. Place it where it will only be hit if your view turns out to be wrong.
The Ultimate Mistake
The last common CFD mistake is to enter a trade when you know that you should not. It is common for new traders to chase a share and jump on board after the share has been moving, however they will quickly learn the error of their ways. A beginner has an excuse, they do not know any different, but even more experienced traders are caught in this trap.
But remember that there are an endless number of trades available, literally more possibilities than you could imagine and if you do not trade now, there will always be another opportunity. Using a checklist to make sure all your setup and entry criteria are in place is one way to avoid the impulsiveness that can be so costly in the markets. Stick to your strategy.
While no trader will be right every time, these silly mistakes can be easily avoided or caught before they have any real impact on your account. - 23217
About the Author:
Jeff Cartridge is a private trader from New Zealand and co-created the website LearnCFDs.com Discover How to Triple Your Profits With Less Effort CFD Trading Strategy
posted by X - Men @ 2:40 AM
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