My most common mistakes

Retrospectively,  I try to list down some of the most common mistakes in my trading process especially after a difficult 3 months from May to Mid August. Despite my years of trading experience, I still fall into these traps. I have to remain vigilant to ensure that I avoid these mistakes.

1. Trade without a plan

This is starting a trade without waiting for the right opportunity and entry signals. It is always better to wait for a trade to come to you than to force yourself to make a trade.

A good plan will have fundamentals aligned with technical indicators and clear entry signals.

You need only to trade when there is a high probability trade with minimum risks

2. Do not follow your plan

There is a plan but you failed to follow it especially the secondary exit. Many times, it is counter intuition and against your belief. A secondary exit implies that you are wrong and you cannot accept it.

This can be a very expensive mistake.Most big losses are incurred because of a failure to follow the plan.

3. Over trade.

I try not to spend too much time on the market when it is on.If I stay to watch the market tick by tick, I am almost for certainty make some mistakes.

My typical schedule is I wake up 1 hour before the market opens. I review the news, any reports that come in and my portfolio. I get a feel of what my expectation for the day will be like.

When the market opens , I watch it for a about 1-2 hours. After that, I am off for a tennis game, the gym or do some errands. I am normally back 1.5 hours before the market close.

In the afternoon, I spend a 3-4 hours reading up, listening to reports, participate in chats, going through my portfolio trying to anticipate any change in trading conditions and record all my trades in details. Yes, once in a while I sit down to write my blog.

The common mistake is to over trade or become a trading junkie. It can be very expensive mistake.

I have 3 separate trading accounts and 1 paper trading account. Interestingly, the account which I am least active has the best performance. This result has been verified for many years!

So remember, trade for profit, not for activity; trade for points, not for ticks.