Top Five Stupid CFD Trading Mistakes
Trading is difficult enough without a simple mistake taking away all your hard won profits. Here are a few ideas that could save you thousands by avoiding silly mistakes.
Is it Buy, Or Sell
Maybe you have pushed the wrong button when you try to exit from a position. Pushing buy instead of sell is quite common, especially if you trade rising and falling markets. This is most common on the exit and rather than getting out of the trade you end up with twice as much.
It is easy to catch this mistake by making a habit of looking at your open positions immediately after placing the trade. If you find that you have made this mistake it is easily rectified at low cost if you act now. Not realising that you have an open position could be a very costly exercise.
Forgotten 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.
When it comes time to close your trading platform look at both your open positions and also check your live or working orders. Make sure there is a match between the two to ensure you are not surprised next time you go to trade.
Zeros Don't Mean Nothing
If you have calculated the correct position size, it is still possible to get it wrong by adding on, or forgetting an extra zero. Too many zeros can results in large losses and too few zeros can dramatically reduce your profits.
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.
Stops Too Tight, You Lose
A very common mistake made by traders is to use very tight stop losses. If the stop order is very near to the current price it can be hit by the normal fluctuations that occur. Tightening the stop loss does not prevent losing money, it often creates it.
Stop placement is a critical piece of your trading puzzle. The stop should be placed outside of the normal fluctuations of the share and at a place where your trade idea will be clearly proved incorrect.
The Ultimate Mistake
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.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability. - 23167
Is it Buy, Or Sell
Maybe you have pushed the wrong button when you try to exit from a position. Pushing buy instead of sell is quite common, especially if you trade rising and falling markets. This is most common on the exit and rather than getting out of the trade you end up with twice as much.
It is easy to catch this mistake by making a habit of looking at your open positions immediately after placing the trade. If you find that you have made this mistake it is easily rectified at low cost if you act now. Not realising that you have an open position could be a very costly exercise.
Forgotten 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.
When it comes time to close your trading platform look at both your open positions and also check your live or working orders. Make sure there is a match between the two to ensure you are not surprised next time you go to trade.
Zeros Don't Mean Nothing
If you have calculated the correct position size, it is still possible to get it wrong by adding on, or forgetting an extra zero. Too many zeros can results in large losses and too few zeros can dramatically reduce your profits.
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.
Stops Too Tight, You Lose
A very common mistake made by traders is to use very tight stop losses. If the stop order is very near to the current price it can be hit by the normal fluctuations that occur. Tightening the stop loss does not prevent losing money, it often creates it.
Stop placement is a critical piece of your trading puzzle. The stop should be placed outside of the normal fluctuations of the share and at a place where your trade idea will be clearly proved incorrect.
The Ultimate Mistake
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.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability. - 23167
About the Author:
Jeff Cartridge is the author of Supercharge Your Trading with CFDs and co-created the website LearnCFDs.com Learn the Foundation of Successful Trading CFD Trading Strategy
posted by X - Men @ 2:27 AM
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