Just started day trading. I came up with a list of common mistakes. Anything else you guys can think of?
1. SHARE SIZING
A lot of beginners make the mistake of using the wrong share size and taking on more risk than they should. Have a constant risk unit for each trade and size your shares accordingly. I suggest 5$ risk unit for beginners. If your stop loss is .50 cents, you should not buying more than, 10 shares if it is a $100 dollar stock. Because it you will be down more than 5$ if you get stopped out. I made a table for different stop loss sizes and printed it out and put it next to my screen. Makes it easier to assess the size.
2. LATE ENTRY
Don't chase. If it doesn't feel right don't get in. A lot of trades called out in chat rooms are late entries.
3. MISAPPLICATION OF THEORY
This is more a technical mistake.
4. IMPULSIVE PLAYS
Don't try to pick bottoms, make up plays, and play off your emotions. If it's not in your plan don't do it.
5. TAKING EARLY TARGETS
A common mistake is letting your fear take over. You need to define a specific event in taking targets to early. Let them run!
6. SPREAD AND VOLUME
Some stocks are thin and have high spreads. Make sure you know what your trading by reading the LVL2
7. DIRTY CHART
I try to avoid sloppy patterns and charts, because they tend to fail.
8. TIME OF DAY
Don't trade during lunch
9. SMALL STOP
Cheating a stop to get in a trade. The smaller your stop, the more likely you get stopped out.
10. EXIT TRADE TOO EARLY
I need to work on letting my play run out, I had the tendency to shut down the trade when I feel like its going against me. Once again fear.
1. SHARE SIZING
A lot of beginners make the mistake of using the wrong share size and taking on more risk than they should. Have a constant risk unit for each trade and size your shares accordingly. I suggest 5$ risk unit for beginners. If your stop loss is .50 cents, you should not buying more than, 10 shares if it is a $100 dollar stock. Because it you will be down more than 5$ if you get stopped out. I made a table for different stop loss sizes and printed it out and put it next to my screen. Makes it easier to assess the size.
2. LATE ENTRY
Don't chase. If it doesn't feel right don't get in. A lot of trades called out in chat rooms are late entries.
3. MISAPPLICATION OF THEORY
This is more a technical mistake.
4. IMPULSIVE PLAYS
Don't try to pick bottoms, make up plays, and play off your emotions. If it's not in your plan don't do it.
5. TAKING EARLY TARGETS
A common mistake is letting your fear take over. You need to define a specific event in taking targets to early. Let them run!
6. SPREAD AND VOLUME
Some stocks are thin and have high spreads. Make sure you know what your trading by reading the LVL2
7. DIRTY CHART
I try to avoid sloppy patterns and charts, because they tend to fail.
8. TIME OF DAY
Don't trade during lunch
9. SMALL STOP
Cheating a stop to get in a trade. The smaller your stop, the more likely you get stopped out.
10. EXIT TRADE TOO EARLY
I need to work on letting my play run out, I had the tendency to shut down the trade when I feel like its going against me. Once again fear.
