5 Things To Avoid When Trading
- No exit plan
- Get involved in markets that haven’t matured
- Letting previous trades influence you
You will have read similar words from me before on this subject. If you are some sort of Zen warrior, you may be able to build some mental barriers to block out outside distractions. However, for us mere mortals we need to put extra steps in place. Just having a quiet area to work in, without the influence of any outside interference is something I consider very important. Imagine taking the family to work with you and then try to do your job!
Having No Exit Plan
Or even no plan at all! I am often staggered by traders’ lack of planning. A bad plan is better than no plan. One of the very first things I do when formulating my trading plan for a market is to identify a potential exit route. I have different routes for back and lay trades. But before I commit my money into a trade I want to know I can exit that trade with a minimal loss if I have got it wrong.
FOMO (Fear Of Missing out)
My pet hate, but a powerful emotion. Jumping on that bandwagon because you are scared to miss out is always punished harshly as I am sure many of you know. These band wagons or glory trains never last forever, and the later you get involved the more likely you will lose money. Spotting the beginning of a move and having that exit plan in place is so important. It does not matter what the twitter heroes are doing. Or any other traders you have access too. It’s important to realise that there are few that want to share their shite trades with you but are very happy to wave their cocks about when things are going well for them. It sucks you in, is destructive and I strongly advise you to do your own thing without any regard for what others say they are doing.
Get involved With Markets That Have Not Matured
What do I mean by this? A great indicator of a volatile market is to watch the candlesticks, what we are looking for is a smooth progression, and a build-up of money traded at each odds point. If the market is jumping up4 ticks and then down 3, then I do not consider the market safe enough to enter. If you watch the video below I hope this will make sense.
Be Affected By Previous trades
The impact of a previous trade is something we all feel. That includes a winning trade or a run of winning trades as well as losing ones. Trading can be severely affected by confidence. So when you are flying you can feel almost invincible, and when you are losing it can drag you into a dark place. This opens up a huge can of worms such as over trading, chasing losses, increasing you stakes unrealistically when you are doing well. All are destructive. Keep a calm, level head and don’t let your emotions carry you away in either direction.