Trading without a trading plan, trading against the trend, not using SLTP orders, surrendering to tilt, and too much leverage can all be devastating to your account balance. But those are not the only mistakes that can deplete your account in no time. What other mistakes are you probably making? Read the full article to find an answer.
Changing your trading strategy
It may seem wise to change your trading strategy immediately after a losing streak, but it is not. Yes, it can be that the strategy you currently employ is not working correctly. However, it can also be that loss-making deals are a part of your strategy. No strategy, no matter how good, can guarantee a 100% win rate. Experienced traders fall victim to losing streaks, too. Remember to keep calm and not surrender to your emotions.
Bottom line: changing your strategy too often can do more harm than good.
Not following the news
All professional traders know: following the news is important. No matter what you trade — CFDs on currencies, cryptocurrencies, ETFs or stocks — major economic and political news have the potential to move the asset price by a lot. The latter can result in a sudden loss, which you can easily avoid by withdrawing from the market during periods of excessive volatility. But news is not necessarily a bad thing — it can provide lucrative trading opportunities, too. Some traders have made a fortune trading the news. Following the news is not hard, predicting the direction of the price action is.
Bottom line: follow the news and try to predict their impact on the asset price.
Not keeping a trading journal
You may think that a trading journal (where you put all your trades and market conditions before and after them) is useless. However, a lot of professional traders would disagree with you. A trading journal is more than a trading history tab in the trade room, it is an in-depth analysis tool that will help you rationalize the decision-making process and make trades more consistent. Random trades, that usually end up with a loss, can be eliminated thanks to it, too.
Bottom line: trading journal IS important, you should keep one.
Mixing up short and long-term deals
In trading, the time frame is of utmost importance. Assets can (and most certainly will) behave differently on shorter and longer intervals. Imagine trading a EUR/USD currency pair when you expect an upcoming event to push the price of the USD up. You open a short position and expect your well-deserved payout. Yet, your deal will expire before the event. It is quite likely that the currency pair will demonstrate the opposite, or at best random, behavior, nullifying your effort and resulting in a loss.
Bottom line: when working on a short/long time interval, trade accordingly.
Holding losers, selling winners
As you probably already know, getting rid of your emotions is the first step to becoming a successful trader. Turns out, a lot of things in trading are simply counterintuitive to our nature. Human beings demonstrate behavioral flaws that lead to suboptimal trading results: being afraid of losing we tend to close winning deals too early; hoping for the best, we let the losses grow. What you want to do is manage losses and let your payouts grow, even if it goes against your deep-seated instincts.