Day Trading Mistakes

If you were to ask any traders who are going through a bad time what their biggest day trading mistakes are, you are sure to find that their problems arise from the times when they deviate from their trading plan or trading system. Any time that you are trading according to your system, and acting rationally, you may have better or worse results day by day but no drastic errors.

There have been many books written about the psychology of trading, but it seems the fundamentals are still hard to implement because of the way we are wired as human beings. We are not made to trade, and we experience sometimes the opposite impulse to that which we should have as good traders.

After all, in what other job are you asked to accept that you did everything right with no mistakes, and you still failed? Yet it happens time and again in the trading world. You place your trade, it goes the wrong way, and you are supposed to "cut your losses" without emotion or hesitation, and without brooding on what you may have done better. The chances are you did nothing wrong, but it is easy to let such failures haunt you.

Impulse trades fall into this emotional category. Surely everyone has done impulse trades, where the trade did not really conform to your requirements, but you still placed it because something seemed to be "right" about it. Or perhaps you have had a slow day, and it just seems that you are not working as hard as you should because the trades have not presented themselves. The impulse is to put in a less than perfect trade in order to feel the satisfaction of "getting on with it" and being busy.

On another day, you may forget to leave your emotions at the door and start to get psychologically involved with the trades you are making. That is when revenge trading can take you over. If you have a succession of losses that seem unjustified, you can get very angry with the market and vow "to get your own back". Perhaps you will double the next trade so that you can try to catch back up with where you think your account should be. This may work sometimes, which would reinforce this bad habit, but other times it will merely double your losses.

There are various ways to look at this. The market is bigger than you or any other individual trader, and it will do what it does, whether or not it "should" do. What has happened before has gone, and will not directly impact what the next move will be. A Zen-like state of detachment from your funds, difficult though it will be to achieve, should be your goal in all trading, as any time that you are counting the pennies in or out you are not operating with a clear and unemotional plan. Cultivate a mental habit of saying "Oh well" when you accept your losses, and learn to move on.

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