By Darrell Martin
The common mistakes made by new traders can actually happen to traders, new or seasoned, at any time.
Let’s look at an analogy of learning to play golf. If someone wants to learn to play golf, he has to learn how to use the clubs. One does not just look at the clubs and choose one that is pretty, and then use the same one on all 18 holes! First, the person must learn which club to use for which hole. Then they learn about length and style. Following that, they must know the conditions to use which club i.e., course, weather, etc., and not all of this can be learned in a 10-minute video! There’s a job for each tool and a tool for each job. It must be learned how to use and master each one for each job.
It is the same for trading. There are many things to learn and master. As traders perceive the mistakes of other traders, and then determine ways to not make the same mistakes, profitable trading can be realized.
Education: As mentioned in another article, education is extremely important. In fact, the longest path to a destination is a shortcut. People spend years and thousands of dollars on college for a career. Some professionals incur a six-figure student-loan debt. A trading career can potentially reap the same income. Invest some time to learn how to trade. Take the time to demo or paper trade. “You don’t know what you don’t know.” Ask questions in order to learn more. Do not be afraid.
Monitoring Too Many Instruments: How many is too many? Watch only as many as can be watched while still following system rules, without missing trades. It is probably a good idea to start out watching two or three instruments as a system is being learned. As the system is mastered, add another instrument.
Inconsistency- Not following a system: As a trader, look at the system being used. Was a trade missed? Were the rules followed? Was there hesitation? The system may be working, but the trader is not working it. To be consistent, when the rules line up, BOOM! The trade must be taken. Do not pick and choose. Murphy’s Law says, “if you pick and choose, you are going to choose the losers.”
Following gut feelings: Some traders feel it is best to follow gut feelings, instead of following a set system of rules. Some gurus even teach this. However, not following what the chart and the system say is only following the gut feeling, which will not lead to success as a trader. Gut feelings can change daily along with mood.
Developing any skill requires an investment of time, practicing of skills, and being open to learning for success in the long term. It is important to have patience when trading. Take the time to demo trade and watch educational trading videos that will help in trading. Be teachable. All traders can learn something. Nobody knows it all! Following gut feelings will not bring the desired success. Learn a system until it is like “muscle memory”, following the rules with exactness, before moving onto another system.
Free education is available at www.apexinvesting.com.