Silly Mistakes CFD Traders Make
I am sure that if you have traded before you have made at least one of these dumb mistakes at some point in your trading career. It is very easy to avoid the mistakes by developing a few simple habits.
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.
This mistake is easily caught by checking in with your open positions after you place a trade to ensure that the trade you have placed did what you expected. If caught immediately this mistake is easily rectified and is likely to only cost a small sum for a stupid mistake. If you do not realise your mistake and the position is left open this can have disastrous consequences for your account.
Alzheimers And Trading Don't Mix
If you exit an order when you are watching the screen, make sure you remember your stop orders. Assuming you have placed a stop on the trade, which you always should, then you must cancel the order if you exit before the stop is triggered. Forgetting your stops is a risky exercise and if the stop is triggered it could be hours before you know that the order was traded. The market may move in your favour, but it is not something I would like to gamble on.
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.
When you look at the open positions after you place an order you should be easily able to verify that the order you placed was the correct size.
Stops Too Tight, You Lose
A very common mistake made by traders is to use very tight stop losses. If the stop order is very near to the current price it can be hit by the normal fluctuations that occur. Tightening the stop loss does not prevent losing money, it often creates it.
Stops must be placed far enough away from the price action to exit you from a position if your trade view turns out to be wrong. Give the underlying share room to move to avoid getting caught by this CFD mistake.
Discipline Is Essential
If you can overcome the previous CFD mistakes there is still one more that you have to master. That is your own behaviour. It is not uncommon for beginning traders to enter a share once it is climbing rapidly, but this usually has disastrous results. However it is not only new traders that get caught by this idea, with more experienced traders also falling for this simple trap.
There are a huge range of opportunities that you can trade, more than you would have capital to follow and there are always other trades waiting around the corner. Ensure you follow your strategy and stick to your trading plan. This can help you avoid chasing trades which can be an expensive exercise.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability. - 23229
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.
This mistake is easily caught by checking in with your open positions after you place a trade to ensure that the trade you have placed did what you expected. If caught immediately this mistake is easily rectified and is likely to only cost a small sum for a stupid mistake. If you do not realise your mistake and the position is left open this can have disastrous consequences for your account.
Alzheimers And Trading Don't Mix
If you exit an order when you are watching the screen, make sure you remember your stop orders. Assuming you have placed a stop on the trade, which you always should, then you must cancel the order if you exit before the stop is triggered. Forgetting your stops is a risky exercise and if the stop is triggered it could be hours before you know that the order was traded. The market may move in your favour, but it is not something I would like to gamble on.
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.
When you look at the open positions after you place an order you should be easily able to verify that the order you placed was the correct size.
Stops Too Tight, You Lose
A very common mistake made by traders is to use very tight stop losses. If the stop order is very near to the current price it can be hit by the normal fluctuations that occur. Tightening the stop loss does not prevent losing money, it often creates it.
Stops must be placed far enough away from the price action to exit you from a position if your trade view turns out to be wrong. Give the underlying share room to move to avoid getting caught by this CFD mistake.
Discipline Is Essential
If you can overcome the previous CFD mistakes there is still one more that you have to master. That is your own behaviour. It is not uncommon for beginning traders to enter a share once it is climbing rapidly, but this usually has disastrous results. However it is not only new traders that get caught by this idea, with more experienced traders also falling for this simple trap.
There are a huge range of opportunities that you can trade, more than you would have capital to follow and there are always other trades waiting around the corner. Ensure you follow your strategy and stick to your trading plan. This can help you avoid chasing trades which can be an expensive exercise.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability. - 23229
About the Author:
Jeff Cartridge is the author of Supercharge Your Trading with CFDs and co-created the website LearnCFDs.com Automate Your Trading So You Can Enjoy More Free Time CFD Trading Strategy
posted by X - Men @ 2:49 AM
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