Top Five Stupid CFD Trading Mistakes
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.
OOPs, I Pushed The Wrong Button
It is not unusual for a trader to push the wrong button when entering or exiting from a trade. It is most common to push sell to get out of a short position, when you really meant to buy. Sometimes it just gets so confusing, so instead of being out you end up with double the quantity.
It is easy to catch this mistake by making a habit of looking at your open positions immediately after placing the trade. If you find that you have made this mistake it is easily rectified at low cost if you act now. Not realising that you have an open position could be a very costly exercise.
Remember Your Stops
You may not like the price action and decide to exit your trade. If you do make sure you cancel your stop loss order. The stop order you placed when you entered the position will still be sitting there waiting for the market to move to the stop price. If you leave the order open it could be traded many hours later and the outcome of the trade is unknown. Trading is not about luck, it may move in your favour, but about discipline to follow your strategy.
Before exiting the trading platform at the end of a trading session make sure you check your open positions match your stop loss orders to avoid any surprises when you next enter your trading platform.
Was That $10000 or $100000
Assuming the trader has the discipline to calculate their position size in the first place, sometimes it is possible to get it wrong. The most common error here is not usually bad maths, it is incorrectly entering the number of zeros. Too many zeros and your risk increases 10 times, too few and your profits evaporate.
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
To avoid losing money many traders will reason that a tight stop will protect them, but placing a stop loss too tight can result in the trader being exited prematurely from the trade. The trader has created exactly what they wished to avoid.
Stop placement is a critical piece of your trading puzzle. The stop should be placed outside of the normal fluctuations of the share and at a place where your trade idea will be clearly proved incorrect.
The Ultimate Mistake
Even experienced traders can be caught out by chasing a share as it moves rapidly. While it is more common amongst people new to trading it still can catch out the more experienced traders. Following this strategy is usually a recipe for disaster and also can be one of the hardest mistakes to overcome.
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.
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. - 23196
OOPs, I Pushed The Wrong Button
It is not unusual for a trader to push the wrong button when entering or exiting from a trade. It is most common to push sell to get out of a short position, when you really meant to buy. Sometimes it just gets so confusing, so instead of being out you end up with double the quantity.
It is easy to catch this mistake by making a habit of looking at your open positions immediately after placing the trade. If you find that you have made this mistake it is easily rectified at low cost if you act now. Not realising that you have an open position could be a very costly exercise.
Remember Your Stops
You may not like the price action and decide to exit your trade. If you do make sure you cancel your stop loss order. The stop order you placed when you entered the position will still be sitting there waiting for the market to move to the stop price. If you leave the order open it could be traded many hours later and the outcome of the trade is unknown. Trading is not about luck, it may move in your favour, but about discipline to follow your strategy.
Before exiting the trading platform at the end of a trading session make sure you check your open positions match your stop loss orders to avoid any surprises when you next enter your trading platform.
Was That $10000 or $100000
Assuming the trader has the discipline to calculate their position size in the first place, sometimes it is possible to get it wrong. The most common error here is not usually bad maths, it is incorrectly entering the number of zeros. Too many zeros and your risk increases 10 times, too few and your profits evaporate.
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
To avoid losing money many traders will reason that a tight stop will protect them, but placing a stop loss too tight can result in the trader being exited prematurely from the trade. The trader has created exactly what they wished to avoid.
Stop placement is a critical piece of your trading puzzle. The stop should be placed outside of the normal fluctuations of the share and at a place where your trade idea will be clearly proved incorrect.
The Ultimate Mistake
Even experienced traders can be caught out by chasing a share as it moves rapidly. While it is more common amongst people new to trading it still can catch out the more experienced traders. Following this strategy is usually a recipe for disaster and also can be one of the hardest mistakes to overcome.
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.
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. - 23196
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 @ 2:48 AM
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