7 most common mistakes in online trading and how avoid doing them

Frequent change of strategy/Hunting for grail

In their beginnings, everyone is looking for a strategy that suits them best. These strategies have often one thing in common - they have been profitable in the past. However, trading on the real market with real money is a bit different. You have to keep in mind that the strategy’s past achievements do not guarantee success in the future. Traders are often not aware of this or they simply ignore the fact and once the first failure comes, they begin to blame the strategy.

From that moment, it’s only a matter of time before the whole strategy is rendered ineffective, abandoned and before hunting for another strategy grail begins anew. And then the cycle continues…
 

How to avoid this mistake

Successful traders believe that every strategy is profitable. It's just traders who are not. Nothing is free and nothing can be earned right away. You have to study the strategy, discover its strengths and weaknesses, realize that you are the one who usually makes mistakes, and when the strategy has a worse period, you have to overcome it and be prepared, because a better period will come again. In the meantime, if you start flirting with another strategy, you will never be able to reap the benefits of the previous strategy and you will be in a vicious circle that will never make you a profitable trader.

Inability to tame one’s ego

No one likes to lose. However, especially in online trading, losses are part of the whole experience. After all, concepts like the risk-reward ratio explicitly take losses into account. It's just that sometimes our egos won't let us get over a loss. Men in particular tend to have a problem with this. In trading, however, the bigger the ego, the smaller the gains.
 

The most common consequences of overgrown ego in trading are:

• constant obsession with lost trades,
• excessive effort to close the trading day in profit,
• early closing of trades,
• blaming your failures on business strategy.

How to avoid this mistake

The Holy Grail is in each of us. Markets operate on the basis of mechanisms that have nothing to do with our ego, so you must get rid of your ego as quickly as possible. Focus on consistency and adherence to the trading plan, be patient, learn to admit loss, and move on to the next opportunity if the trading strategy gives you a signal. Don't try to bring it back to the market right away, because it will punish you again. For example, you can train meditation when you look at your ego from a perspective and ideally find that it is not something that should control you.

Fear of loss

We are each unique in our own way and just like one trader can handle hundreds of trades a day, another will not trade all week, and both can follow the same strategy. Despite initial failures, many traders are unable to decide whether the opportunity they are seeing is the right one, and sometimes they even over-analyze the markets and end up without opening a single position. The reality is that the fear of losing completely eliminates them from the game. Here you can learn a lesson from professional athletes. Do you think that Michael Jordan was thinking about what if he accidentally hit the hoop every time he was trying to score?
 

How to avoid this mistake

Fear is just an illusion that we create ourselves by projecting the future, which, however, does not have to take place at all and basically does not exist. The danger in the markets is very real, but fear is just a choice. Fear can only hurt us, because with it you enter every trade with failure on your mind. Try to interpret fear as enthusiasm for another opportunity that the market has offered you, and instead of projecting a negative future, imagine how you realize one profitable trade after another.

Neglecting the business diary

Especially beginners, but also advanced traders are advised to write a trading diary. However, it does not include only the date, the price you entered and the result. You should also write down what you feel when opening the trade and what is going through your head during it. How else do you want to avoid the same mistakes that you may keep repeating. Writing a diary itself is a step towards greater discipline, which over time can eliminate frustration and fear.
 

How to avoid this mistake

You can also gradually interpret your losses so that they are part of the entire trading system. After all, trading is basically working with probability, and just by learning from your losses you can increase your probability. A bad trade will only be the one from which you will not take any money or experience. Likewise, if you are going through a rougher phase, you can always return to previous trades from when the strategy worked and look for patterns why the strategy is not working this time.

Insufficient consistency

Doing things regularly is one of the few qualities that unites successful people across all professions. Have you ever seen a farmer water a field only when he wants to? The problem with consistency in trading is that many traders are blinded by the daily gain they cling to. You should not try to be the type of trader who tries to hit one big trade and then gradually hand over his profits to the market.
 

How to avoid this mistake

There is nothing wrong with not finding an opportunity in the market. However, it is bad if you make a few losses and then take a break for a month and return to trading with the fear that you have missed something and that a worse period awaits you again. It is said that the habit is an iron shirt, and although the routine may sound boring, remember that you do trading because you enjoy it, and if you have it differently, you might want to wonder if this is really what you want to do.