Dumb Things CFD Traders Do
I am sure that if you have traded before you have made at least one of these dumb mistakes at some point in your trading career. It is very easy to avoid the mistakes by developing a few simple habits.
Is it Buy, Or Sell
It is not unusual for a trader to push the wrong button when entering or exiting from a trade. It is most common to push sell to get out of a short position, when you really meant to buy. Sometimes it just gets so confusing, so instead of being out you end up with double the quantity.
This mistake is easily caught by checking in with your open positions after you place a trade to ensure that the trade you have placed did what you expected. If caught immediately this mistake is easily rectified and is likely to only cost a small sum for a stupid mistake. If you do not realise your mistake and the position is left open this can have disastrous consequences for your account.
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
While it is possible to get the maths wrong when calculating your position size it is far more common to get the number of zeros wrong when you place the trade. An extra zero means your risk increases by a factor of 10 times and forgetting a zero reduces your profits to 1/10th.
When you look at the open positions after you place an order you should be easily able to verify that the order you placed was the correct size.
Avoid Placing Your Stops Too Tight
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.
Stops must be placed far enough away from the price action to exit you from a position if your trade view turns out to be wrong. Give the underlying share room to move to avoid getting caught by this CFD mistake.
Discipline Is Essential
If you can overcome the previous CFD mistakes there is still one more that you have to master. That is your own behaviour. It is not uncommon for beginning traders to enter a share once it is climbing rapidly, but this usually has disastrous results. However it is not only new traders that get caught by this idea, with more experienced traders also falling for this simple trap.
The market offers an unlimited supply of trading opportunities, far more than you could ever possibly trade. If you miss a trade today, there will be another trade along soon enough. By following a trading plan you can avoid getting caught by impulsive trades, which can prove to be costly.
Avoiding these silly and costly mistakes will certainly improve your trading results. It is not necessary to throw away money unnecessarily. - 23208
Is it Buy, Or Sell
It is not unusual for a trader to push the wrong button when entering or exiting from a trade. It is most common to push sell to get out of a short position, when you really meant to buy. Sometimes it just gets so confusing, so instead of being out you end up with double the quantity.
This mistake is easily caught by checking in with your open positions after you place a trade to ensure that the trade you have placed did what you expected. If caught immediately this mistake is easily rectified and is likely to only cost a small sum for a stupid mistake. If you do not realise your mistake and the position is left open this can have disastrous consequences for your account.
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
While it is possible to get the maths wrong when calculating your position size it is far more common to get the number of zeros wrong when you place the trade. An extra zero means your risk increases by a factor of 10 times and forgetting a zero reduces your profits to 1/10th.
When you look at the open positions after you place an order you should be easily able to verify that the order you placed was the correct size.
Avoid Placing Your Stops Too Tight
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.
Stops must be placed far enough away from the price action to exit you from a position if your trade view turns out to be wrong. Give the underlying share room to move to avoid getting caught by this CFD mistake.
Discipline Is Essential
If you can overcome the previous CFD mistakes there is still one more that you have to master. That is your own behaviour. It is not uncommon for beginning traders to enter a share once it is climbing rapidly, but this usually has disastrous results. However it is not only new traders that get caught by this idea, with more experienced traders also falling for this simple trap.
The market offers an unlimited supply of trading opportunities, far more than you could ever possibly trade. If you miss a trade today, there will be another trade along soon enough. By following a trading plan you can avoid getting caught by impulsive trades, which can prove to be costly.
Avoiding these silly and costly mistakes will certainly improve your trading results. It is not necessary to throw away money unnecessarily. - 23208
About the Author:
Jeff Cartridge is a private trader from New Zealand and co-created the website LearnCFDs.com Discover How to Triple Your Profits With Less Effort CFD Trading Strategy
posted by X - Men @ 2:55 AM
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