There’s a post up on the Winner’s Trading Edge site that purports to list the 97 top forex mistakes. Most of the 97 are equally applicable to trading basically any market, not just forex. Most of the list I definitely agree with, though there’s a bit of redundancy in places. Some of the best ones are:
Not having a life: Balance is key.
Thinking the market is wrong: Your opinions of what should happen are just that, opinions.
Failure to take responsibility: This is huge. I can’t stand it when traders blame everything but themselves for their failures.
There are also a few I definitely think are problematic. They include:
Not having a profit target: This is only applicable if a system is designed to use a target. Not all trading methods and systems work optimally with them (like many trend-following approaches).
Cutting winning trades too quickly: This is basically a contradiction to the prior one in that it suggests letting winning trades run. Again, whether you let them run or have a profit target depends on the system or method you use.
Trading with fear: A little fear is healthy. It makes you respect the markets and not get carried away with risk-taking. Too much fear, though, is a problem.
Trading with the crowd: Folks get carried away with thinking they need to trade against the crowd. The problem is the crowd is often right and potentially is driving the market. It’s just when things get extreme that you want to be cautious.
Not having fun: I think most long-term successful traders will shy away from calling trading fun. It certainly isn’t drudgery, but it’s not viewed at as a game. It’s a business, not a leisure activity.
Give the list a look and let me know which ones you’ve fallen victim to and/or have had the biggest impact on you.
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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
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