10 Mistakes You’re Making In Trading – Part 2
- Not Treating it like a business
- Unrealistic Expectations
- Emotional Trading
- Tracking your trades
- Trading Routine
- Sticking to Your Plan
- Blinding Following A Trade Signal Service
- Not having a mentor
Let’s cut the crap, trading is difficult, there is a reason why so few succeed. I am sure you’ve heard the saying that 10,000 hours is required to master any craft, personally, I don’t believe this is sufficient to master the markets, double that and you’re getting close! With that being said, don’t get downhearted that you’re not a millionaire in 1 month or you’re still struggling after a year, you’re in for the long haul, but trust me, it’s worth it….
Statistics show that only 5% of traders succeed and develop into full time, consistently profitable traders. If you are reading this and fed up of being in that 95% of failing traders, here is 10 mistakes you are possibly, well probably, making. I guarantee changing just one problem you have been suffering from, will result in an improved performance at the charts. After all, everything takes time, trading is no different from any other profession that you need to master.
Prior to take off, pilots go through their pre-flight checklist, making sure the plane is in perfect condition before embarking. Should anything fail as they make their way through the checklist, the plane will not fly. Heed Legendary trader Jack C Boyle advice, “time is your friend, impulse is your enemy”, the is especially true as if your taking trades that do not fit all the criteria in your trade entry checklist, you’re flying a plane with a faulty engine. New or novice traders want the thrill of being in a trade and the potential of making money off said trade. However, if you are finding that your impulse is getting the better of you, take the 10-trade challenge – for the next 10 trades, make sure everyone fits your setup criteria to a tee, what’s the worst that can happen?
- Trading Routine
One of the last things I do every night is tidy and wipe down my desk so it’s completely clear of any clutter or rubbish when I step into my office in the morning. The consistency I have with this doesn’t amuse my partner as apparently, I don’t do this enough in other parts of the house, anyway, ill probably get in trouble for that later. Coming into a nice clean office helps me clear my mind and start fresh for the day ahead.
As I trade the London session here in UAE, I have a few hours in the morning where I can get a bit of exercise in and a decent breakfast before heading to the office and starting the scan at around 10am GST to create my daily watchlist (RT.FX Personalised watchlists are available in the RT.FX Store at https://rt-forex.com/shop/). I then stream at 10:30am to RT.FX Members (are you one yet? No? why?) with the pairs I’m looking at for the day ahead, throughout the day I will have a quick check on the chart to see if I’m taking a trade or not and then do my final US Open stream at 5:30 GST before shutting down and switching off for the night. There is some work I do in-between but that stuff will bore you.
Having a routine will help you in the following ways:
- Get to know the session you’re trading in depth (E.g., UK, US, ASIAN)
- Creates structure and discipline.
- Avoids spending numerous hours at the computer sitting down.
- Improves confidence.
If you have a full-time job, figure out when you can look at the market, my morning scan is the most important one of the day, and really, it doesn’t take much effort after that. Thus, I never buy when anyone says, “I’m too busy”, it doesn’t fly with me, if you want to make a real change you have to put the effort in. My morning scan will take the same time as watching one episode of Friends on Netflix, that’s it, there’s no excuses for wanting to make more money, but not being motivated enough to put the effort in to do that. In my previous job I got home at 5/6pm and immediately went up to trade stock options and watch trading videos until 12 at night, the funny thing is it didn’t seem like work to me, I loved it!
- Sticking To Your Plan
So, you’ve got your strategy, created your trade entry checklist, and think that’s it right? Wrong! Now comes the hard part, STICKING TO IT! Strategy creation encompasses about 30% of a successful trader, what’s the 70%…MINDSET! For those completely new traders, you may not understand what I am talking about, but when you start risking your money in the markets you certainly will. We are not born as traders; one learns to trade by trading itself. You must have the discipline to stick precisely to your trading plan, don’t take trades that are 90% there, 95% there or 99% there, only take trades that fit your entry criteria 100%. The likelihood is those trades that are taken on a whim because they are “close enough” to your strategy, will cause unnecessary losses in the long run, yes you may get lucky on the odd occasion, but overall, they will cost you money. Stick to your strategy, tell yourself for the next 10 trades you will 100% stick to your trading plan, and see what happens, the results will shock you.
- Blindly Following A Trade Signal Service
Don’t get me wrong, I’m not knocking signal services at all, lots of services out there are good, a lot are terrible and are fronts for schemes that trick consumers to sign up to a certain broker, where those individuals will profit from the referral fees that that brokerage has offered them. You may spot these accounts by what they post, if it is all about money and flash cars etc. and absolutely no content, just be a bit cautious. Whist signal services can work for some, most of the time they won’t. If you are looking for a signal service, make sure to select one that’s strategy is something that resonates with you, so you understand why the trades are being placed. From a personal standpoint signal services can only work if the individual who is using one understands trading and how the industry works, they will NEVER work for anyone who has no idea what they are doing and just wants to make money.
- Not Having A Mentor
You don’t have to do it all on your own, find a mentor who has been there, done it, and come out the other end. I have likened trading to a university degree, in university you have a teacher/professor who will provide you with the tools and education needed to complete that degree, why shouldn’t the same be true for trading?
If you do wish to go down this route (and I think a lot would benefit from mentorship) it’s important to choose a mentor that’s strategy and way of analysing the markets resonates with you. There’s no point employing a mentor who is a full-time scalper when you are a swing trader, it won’t fit, square peg round hole.
Mentorship will likely be the best decision you have made in your trading career, it is expensive, but what you must think of is the potential return on investment of that decision, it certainly was the best money I have personally spent. If I had started with my mentor earlier, I probably wouldn’t have had that $20,000 loss day, but I try not to dwell on that (I only mention it every blog, get over it Ryan) …. Those members of RT.FX that apply for mentorship with me will come out a profitable trader (if they put the work in!).
Mentors can’t do everything for you, but they can help you get to where you need to be, quicker than if you go it alone (again, this is if you commit to putting the work in that is required…and it is a LOT of work!).
Final Thought – If you have changed any of these 10 bad habits, how did it work out for you? Let me know, I would love to be able to hear what you have improved upon and why! If you’re still struggling or want more information on mentorship, come and take our 7-day free trial!
Good luck and trade SAFE