The 30 most costly trading errors

The most common and most costly error is the inability to cut ones losses.
There are psychological barriers to learning this skill, most can't overcome them.
A few of your errors (like #1,3,4) emanate from this basic trading skill.
 
Quote from 1flyfisher:

The most common and most costly error is the inability to cut ones losses.
There are psychological barriers to learning this skill, most can't overcome them.
A few of your errors emanate from this basic trading skill.
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the most common and most costly is being underfunded and having no rent money .... if one was set with the bills and had 500k to play with it would be much easier than having 25k and having to pay the bills from there....that's why the hit ratio is so low I think...its like starting a business with very little funds...
 
Quote from Cutten:

“It’s hard to repeat a brilliant performance, but it’s straightforward to avoid errors” - Paul Graham
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31. Moving your stop to breakeven without a good reason
 
I AGREE WITH:

Quote from Cutten:
1. Not honouring your stops.
2. Becoming seriously emotionally destabilized (going on tilt, freezing up, getting mad)
4. Trying to average down on a losing position.
5. Revenge trading
6. Trading too big or too leveraged.
9. Getting cocky after a good run or a big winning trade.
10. Having on lots of highly correlated positions.
11. Not exiting all positions and going away from your screens when you have a big destabilizing loss.
12. Getting tunnel vision - only focusing on things going right and how much money you think you will make, rather than how much you could lose if you’re wrong.
15. Not reducing size or stopping trading during high market volatility e.g. market crashes, surprise news, gap moves, short squeeze, earnings or figures etc.
17. Assuming you are right; not thinking of what could be wrong with your position.
18. Taking positions without doing proper preparation.
19. Thinking emotionally about the money or position size
29. Trading while drunk, high, exhausted, divorcing, mourning a death in the family etc
30. Trading on other people’s tips [/B]
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There are a lot of delusional people that think they can make a living trading with 10-25-50k etc.
I believe the most common and widespread (trading) error is the inability of cutting ones losses.




Quote from ElCubano:

the most common and most costly is being underfunded and having no rent money .... if one was set with the bills and had 500k to play with it would be much easier than having 25k and having to pay the bills from there....that's why the hit ratio is so low I think...its like starting a business with very little funds...
More...
 
the most terrible mistake people made is they do not know themselves, of course they do not know the market either.

they think they are smart, but they are not
they think they can manipulate the market, but the market is out of control

if you can admit "I am stupid, I am at the mercy of the market", then you will make no mistakes.

why you did not cut loss? since you think the market will come back (sometime market never comes back)

why you keep buying/shorting when the market is dropping/ralling? since you think the market will stop dropping/ralling or you think there is a bottom or a top (sometime market has no bottom and no top)


.......
 
Very nice subject ....
all of the items are true and briefly : LACK OF DISCIPLINE AND LACK OF PATIENCE are the main reasons traders fail.
and always remember : TRADE WHAT YOU SEE AND NOT WHAT YOU THINK
 
Quote from 1flyfisher:

The most common and most costly error is the inability to cut ones losses.
There are psychological barriers to learning this skill, most can't overcome them.
More...

After 1 year trading I finally got to this point CONSISTENTLY less than 2 months ago.

There is no better feeling than mastering the ability to cut losses quickly without emotion. NOTHING has given me more confidence than knowing I have a stop in place at my max loss and I don't even for one minute contemplate moving it except in my favor.

This means there's nothing to distract me from putting on other trades, and nothing to worry about (except a trading halt or overnight gap).

I can now manage 5 trades at once, no worries.
 
One I do not see on the list, is people scalping who have no business scalping.

You can pay the same entry/exit costs at 30 seconds as you do for 3 days. And that slippage/commissions/errors/fees/etc. can eat up all or more of your expected profits. It is the house rake.

Learn to trade longer time scales.

But a great list.
 
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