Dumb Things CFD Traders Do
There are certain silly mistakes that all traders have made at some point in their trading careers, even though there are simple techniques that can be used to avoid them.
Is it Buy, Or Sell
One of the first mistakes that is very common is pushing the buy button when you meant to sell or the sell button when you meant to buy. This often happens when exiting a position especially if you are trading both long and short. Instead of exiting the position you end up with a position size twice what you started with.
When you place a trade immediately check your open positions. By doing this you will pick up the mistake before it costs a significant amount of money. Not realising that you have an open position can be far more expensive.
Remember Your Stops
You may not like the price action and decide to exit your trade. If you do make sure you cancel your stop loss order. The stop order you placed when you entered the position will still be sitting there waiting for the market to move to the stop price. If you leave the order open it could be traded many hours later and the outcome of the trade is unknown. Trading is not about luck, it may move in your favour, but about discipline to follow your strategy.
To catch this mistake, always check your open trades and stop losses before closing your trading platform. This way you will know what trades you have open and avoid any unpleasant surprises next time you trade.
Oops, Too Many Zeros
If you have calculated the correct position size, it is still possible to get it wrong by adding on, or forgetting an extra zero. Too many zeros can results in large losses and too few zeros can dramatically reduce your profits.
Checking your open position after the order is placed should enable you to pick up this error as the size of the position will be very different to your normal trading size.
Stops Too Tight, You Lose
To avoid losing money many traders will reason that a tight stop will protect them, but placing a stop loss too tight can result in the trader being exited prematurely from the trade. The trader has created exactly what they wished to avoid.
When you decide where to place your stop order you must place it far enough away from the price to avoid getting caught up in the normal range of movement. Place it where it will only be hit if your view turns out to be wrong.
Discipline Is Essential
Even experienced traders can be caught out by chasing a share as it moves rapidly. While it is more common amongst people new to trading it still can catch out the more experienced traders. Following this strategy is usually a recipe for disaster and also can be one of the hardest mistakes to overcome.
There are a huge range of opportunities that you can trade, more than you would have capital to follow and there are always other trades waiting around the corner. Ensure you follow your strategy and stick to your trading plan. This can help you avoid chasing trades which can be an expensive exercise.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability.
