There are 4 major pitfalls that all traders face.As you review the following attitudes and emotions, we encourage you to check your trading so that these emotions aren’t dominating your decision making.
1. Desire to Be Rich Quick
The desire to get rich quick can cause a trader to make poor money management decisions.A trader tends to over trade and force trades that do not fit their trading discipline.
2. Fear of Losing
A fear of losing money can often come after a bad trade or a series of bad trades.Remember, all traders have bad trades and occasionally go on negative streaks.This fear of losing can paralyze a trader.When good trading opportunities present themselves, they are not confident in their analysis and miss out. A positive mental attitude is essential to overcome disappointing loses.
3. The Need to Be Right
Severe losses are often sustained when a trader lacks the discipline to exit a trade.They desire to be right on all trades and refuse to accept a loss. There are times when you may regret being stopped out of a trade because it quickly reverses; however, more often than not the trade will continue to go against you.Remember…losses are part of the game.Learning to accept them and having the confidence to move on is the mark of a successful trader.
4. Being Undisciplined
An undisciplined trader makes random decisions.Emotion tends to govern trade decisions and the trader tends to react to news and trade recommendations without doing their own homework.The system that this trader uses for trading continuously changes.
It is very important to make consistent trade decisions.Trades based on fear, greed, and overconfidence lead to poor decisions that will lose you money in the long run.If you notice these emotions, step back for a few days and let yourself return to the positive attitudes and principles that make you money.
Happy Trades
