How to turn the main mistakes of a trader into real money

The main mistakes of a trader: an excellent incentive to move forward!

Imagine that absolutely all traders, regardless of the type of assets, the size of deposits and trading purposes, began to strictly follow the management, open deals according to the correct (profitable!) trading strategies and to control fully their emotions.

And what will happen with the price? Correctly − nothing.

It will simply stand still, because the market will lose its main driving force − the movement of capital from hand to hand.

The price of the market is moved by the people, or rather by their emotions, mistakes and the ability to take risks. Of course, there are large volumes that are conditioned by the state, corporate, industrial or banking interests, but, ultimately, this is also business, which means − people and risk.

Let’s get to the point.

For whom this article?

We recommend you read it to everyone who is interested in financial markets, regardless of the role you see yourself: a trader, an analyst, an investor or an ordinary «hungry» observer.

You should understand that the situations that fall into the section «the main mistakes of a trader» are inevitable for any speculator, simply the severity of the consequences depends on experience and the scale of the particular player’s capital.

Risk comes from not knowing what you are doing.
Warren Edward Buffett

For some reason, everyone remembers well how George Soros earned a billion on the crash of British pound sterling, but forget that the same «great investor» in 2000 «missed» the turn point, and on fall of index NASDAQ lost almost $3 billion.

Typical mistakes are being pursued for several generations of players; but not all of them can rise after the losses and draw the right conclusions. We propose to study in detail standard situations and learn how to prevent them (see The 10 Worst Mistakes Beginner Traders Make )

So, we assume that the trader has completed basic training, had a successful result on the demo account and acquired the first trading skills on a small real deposit. Then the most possible errors can be divided into three groups.

Psychological mistakes

Most often, the causes of trade failures are in the field of psychology and destructive emotions, and if the trader knows how to overcome them, then the reliability of its transactions increases dramatically.

The main symptoms are:

  • Trading «impudence» accompanied with the lack of knowledge

Attempts to replace the commercial confidence with the unreasonable self-confidence, and persistent (disciplined!) work with a banal stubbornness. Market throws overboard such traders at the first loss (see Five Mental Errors to Help You Lose Money).

How to avoid this?

Learn constantly, in detail and perseveringly: trade on a demo account until you get a stable result.

  • A lot of transactions with a minimum profit

These activists claim the title of «superscalper», but behave in the market as if they had «ants in the pants». Big enthusiasts of all kinds of automatic trading, but their understanding of management is weak. Opening dozens (and sometimes hundreds) of transactions per day is certainly very encouraging for the broker, but the trader only gets nervous breakdown and stable losses.

How to avoid this?

Do not open a trade without a strong trading signal, do not catch every item in shallow traffic, do not place Stop Loss too close, do not use automatic trading without full testing. And stop feeding the broker with spreads and commissions!

  • Fear and uncertainty

This problem «filters» the most a crowd of newcomers. If a trader cannot force himself to open a position, when a trading strategy demands it, he gets into an endless cycle: there is no confidence in himself − there is no deal; no deal − no result; there is no result − it is impossible to analyze the errors, and accordingly, there is no chance to improve this result. And without result − no one believes in the trader (see here Persistent Trading Mistakes ).

How to avoid this?

Tempering the character and determine the personal positive motivation. We reduce personal expectations for profit, go to cent account, improve our trading strategy. If you still cannot overcome your fears − go to investors, analysts, observers (see above), until the loss has reached a critical size.

  • Trade in other people's signals or a gift from the «guru»

The ideas of «superprofits» advertised by brokers and Forex-coaches are specially created for the quick loss of money by trusting newcomers. Opening a deal not for its trading strategy only because someone's authoritative advice or analytics seem to you super effective, leads to losses in about 70% of transactions.

How to avoid this?

Do an independent analysis of the market, critically examine all the «incoming» information − analytics, news, recommendations and trade signals. Take only independent decisions. Continuous training, excerpt and reasonable risk management will help to achieve the required level of professionalism, and also will save you both the deposit and health.

  • A constant desire to recoup or the effect of «kamikaze»

Despite the constant losses, excitement, the greed and ambition make it necessary to open all new transactions without a full analysis of the main mistakes of a trader; and this process can be stopped either by a revolver or by a zero on a commercial deposit.

Have the courage to say «no». Have the courage to face the truth. Have the courage to do what's right, because it's right.
William Clement Stone

How to treat?

Convince yourself that you are not playing Forex and are not wage war with the market makers − you are WORKING ON THE FINANCIAL MARKET. Have the courage to soberly assess the situation, but if you are not able to curb your excitement − look for your chance in the casino.

  • Emotional instability due to mistakes and losses

Only the one who does nothing is not mistaken. Do not lose only the one who does not sell. A successful trader analyzes the mistakes and plans future deals, but only the loser constantly experiences past losses.

How to avoid this?

Do not trade on amounts larger than you can afford to lose. Do not regret the past − draw conclusions and live on. Try to fulfill the mandatory trading plan (day, week, month). It is necessary to remove all irritants, fully rest and in no case to remove stress by antidepressants. Health is always worth more than money.

The second (in terms of the possible losses) group of the main mistakes of a trader is trading mistakes. The reasons can be different − technical illiteracy, lack of practical experience, emotional problems − each trader has his own «personal» kit.

Problems of trading strategy

We warn: we do not consider trading without a proven trading system at all − we think that our readers are experienced enough to avoid this.

Whatever a perfect strategy is, you should look at the results from time to time.
Sir Winston Leonard Spencer-Churchill

If the trades executed strictly according to the strategy, but it still gives losses, then we must stop trading and analyze the reasons:

  • Weak testing or low profitability: we again conduct tests and adjust the conditions if the results are consistently negative − we switch to another strategy;
  • Mistrust of the trading system or too complicated conditions: we correct and analyze the errors, perhaps you did not apply the trading rules correctly;
  • Misunderstanding of the characteristics and rules of the trading system: we study, we check on various assets and trading modes, we analyze the result.

We warn: frequent or abrupt change of strategy or simultaneous application of the several systems leads to poorly controlled losses. This is permissible only if there is a stable experience of universal trade.

Problems of trading behavior

  • Trading against

The «Star disease» trend of the newcomers who consider themselves to be geniuses, and all others – idiots leads to the drained deposit in 70% of cases.

How to avoid this?

Until there is no long-term experience and a million on deposit − trade only in the strongest direction. It's not you who has created this trend, so do not trade against it.

  • Misunderstanding of the trend

Standard attempts to catch up with the departing train; buying at the maximum, selling at a minimum.

How to avoid this?

Learn the technical analysis and the specifics of the movement of the price of your chosen asset.

  • Misunderstanding of the impact of volume

A trader sees an active price movement, but forgets that it must be supported by the appropriate volume.

How to avoid this?

Buy on the bull market only with the support of the volume and breakdown of the corresponding resistance level. For sales − the reverse conditions.

  • Non-compliance with the rules of management

We assume that there is a correct understanding of the principles of money management for our readers, but this lesson is best remembered after the personal losses.

How to treat?

Observe money management in EVERY deal, without exception.

And the last group of the main mistakes of a trader are: organizational problems.

Organizational problems

  • Skipping profitable trades without obvious reasons

Optimize the workflow, disconnect all unnecessary and do not change the mode of operation and terms of trade without a serious need. Do not trade in an inadequate state (illness, stress, alcohol, etc.).

  • Deals strictly on the trading system give chronic losses

If this is not a problem of the trading strategy (see above), then today is just «not your» day, cut yourself off from the market and rest. The market will always be there.

  • Technical negligence

Ensure your trading process is supported with reliable technology and stable communication channels.

And what is the result?

Statistics prove that the most chances to become financially independent are killed by the greed, laziness, illiteracy. But the main mistake of the trader is the fear of making a mistake.

In this world there is always danger for those who are afraid of it.
George Bernard Shaw

Look at it this way:

a person who has never made a mistake in his life will never achieve anything. Your personal blunders are your most valuable experience, because today's losses and correct conclusions will help you to save capital in the future.

Work − and let profit be with us!

Try It Yourself

Trading psychology is one of the essential pillars of the Forex success, so even if you are an experienced trader, you shouldn’t dismiss a trading psychology advice.

Do you need a comfortable space in order to take control over your emotions and get prepared to the live trading?

Simply Forex Tester for free. In addition, you will receive 23 years of free historical data (easily downloadable straight from the software).

Grow your patience, boost your trading skills, learn to avoid psychological traps without drawing your live account.

Share your personal experience of dealing with the main mistakes of a trader. Was this article useful for you? It is important for us to know your opinion – share your comments below!


Get a Free Trial

Log in to download the program instantly.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for requesting the demo!

We have sent you a link to the provided email

Please be aware that the message could possibly be filtered into your spam folder.

Thank you, your authorization was successful.

Please use your PC to download the free trial.

Free download

Thank you for Downloading!

While Forex Tester is loading on your computer, let's start by reviewing the initial guide:

Start easy

If the download hasn't begun, please click
"Retry download".