5 Major Trading Pitfalls you must avoid at all costs!
What every investor and trader MUST AVOID to succeed.
Pitfall #1. Betting the farm. Let's be realistic. Not every trade is going to be a winner. Here is a simple rule for you to remember. Never commit more than 10% to any one position. When I was trading in the pits in Chicago I heard for the first time about the "RIOTRADE". Simply put, you take a huge position in the market. If it works out, you are a hero. If you lose, you leave home and head for Brazil. Again, NEVER BET THE FARM ON ANY POSITION.
Pitfall #2. Planting too few seeds. This one goes hand in hand with the first pitfall. The key here is diversification and following several markets. Ken watches 30 markets and looks for profit opportunities in each one as they occur. PLANT MORE SEEDS AND YOU CAN ENJOY MORE WINNERS.
Pitfall #3. Jumping the gun. Patience, patience, patience. This is perhaps one of the toughest things for traders to remember, particularly after they have taken some good money out of the market. JUMPING INTO A MARKET BEFORE ALL INDICATORS ARE POSITIVE CAN CAUSE UNNECESSARY LOSSES.
Pitfall #4. The hope trap. This is one of those pitfalls that goes completely against human nature and it is the biggest account killer. What I am talking about is hanging onto a losing position in the desperate hope that it will turn around. A SIMPLE SOLUTION IS TO ALWAYS PLACE A STOP ON EVERY MARKET POSITION AND DO NOT CANCEL IT!
Pitfall #5. Leaving the barn door open. Don't let your profit evaporate. Once you are in a profit situation continue to move your protective stop to lock in a profit. STOPS ARE IMPORTANT TO BOTH PROTECT INVESTMENT CAPITAL AND LOCK IN PROFITS.
Adam Hewison
President, INO.com
Co-Founder, MarketClub
