A list of don’ts for new and inexperienced traders
We often post up what new and inexperienced should do, as opposed to warnings of not what to do. In this article we’ll compile a list of don’ts, as opposed to a list of do’s. We’ll focus on many of the mistakes and faults traders are guilty of and suggest gentle ‘nudges’ to alter that behaviour. As always we’d welcome reader feedback, particularly in relation to adding to our list of don’ts…
Don’t trade versus the medium/long term trend, unless you’re a very experienced scalper/day trader using the most sophisticated trading platform.
Don’t forget that you can’t mathematically calculate probabilities. The probabilities will play out in a random and chaotic distribution that you and the markets have absolutely no control over.
Don’t fret over loses, they’re a natural part of doing business in this business.
Don’t lose sight of the fact that there are many ways of arriving at the same decision and conclusion to a successful and or unsuccessful trade.
Don’t trade or make a trading decision when you fear a loss. Trading your plan should involve being in the market when your high probability set up occurs, you should aim to be emotionally neutral when trading.
Don’t lose sight of how long this journey is. The only short cuts are provided by words of wisdom from fellow traders, mentors, articles or books that can enhance your knowledge and shorten the learning curve.
Never assume your learning is done, always remain open minded. Never ignore the opinion you disagree with as this could prove to be the most valuable advice available.
Don’t make decisions based on your emotions, make your decisions based on the now, not on the future.
Don’t trade without a plan, however basic it may be in the early days, commit your plan to a record; on your PC, or hand-written if necessary and stay committed to your plan until you recognise it’s time to amend it.
Don’t enter trades without first planning the entry, take profit limit order and the stop loss.
Don’t add to losing positions. Keep your trading simple. Bet on one security with a one way ticket. Complicated trading methods are best left to those with the tools and experience to do so.
Don’t blame your broker for your mistakes. Trading when NFP figures are printed? Just like the rest and the best you’re risking; poor fills, slippage and not being able to get in or out of the market.
Don’t trade unless you’re ready to trade and have a reason to take that trade.
Don’t do ‘boredom’ trades.
Don’t think in terms of months to become a successful trader think in terms of years. However suited you are to trading, emotionally and mentally, the journey to success and consistency cannot be measured in months.
Don’t confuse opinions that you see in articles or on forums with facts.
Don’t trade for the sake of having a trade in the market at any one time, being out of the market is in fact a position and can be more profitable than being in the market.
Don’t trade if you begin to doubt your trading plan. Stop immediately and reassess the situation.
Don’t believe you always have to “trade at market”, why not set a pending order and let the price come to you.
Don’t have false pride when it comes to trading, the markets will always have the capacity to humble us, however experienced we are.
Don’t ignore or bury your early mistakes, focus on what you’ll do differently next time.
Don’t let trading sabotage other aspects of your life. The best traders spend minutes a day preparing and actually physically trading. Work to that goal.
Don’t take the trades suggested by others unless you’re a fully committed mirror or copy trader.
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