Top Five Stupid CFD Trading Mistakes
There are certain silly mistakes that all traders have made at some point in their trading careers, even though there are simple techniques that can be used to avoid them.
OOPs, I Pushed The Wrong Button
One of the first mistakes that is very common is pushing the buy button when you meant to sell or the sell button when you meant to buy. This often happens when exiting a position especially if you are trading both long and short. Instead of exiting the position you end up with a position size twice what you started with.
When you place a trade immediately check your open positions. By doing this you will pick up the mistake before it costs a significant amount of money. Not realising that you have an open position can be far more expensive.
Forgotten Stops
If you exit an order when you are watching the screen, make sure you remember your stop orders. Assuming you have placed a stop on the trade, which you always should, then you must cancel the order if you exit before the stop is triggered. Forgetting your stops is a risky exercise and if the stop is triggered it could be hours before you know that the order was traded. The market may move in your favour, but it is not something I would like to gamble on.
Before exiting the trading platform at the end of a trading session make sure you check your open positions match your stop loss orders to avoid any surprises when you next enter your trading platform.
Oops, Too Many Zeros
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
To avoid losing money many traders will reason that a tight stop will protect them, but placing a stop loss too tight can result in the trader being exited prematurely from the trade. The trader has created exactly what they wished to avoid.
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.
Follow The Rules
The last common CFD mistake is to enter a trade when you know that you should not. It is common for new traders to chase a share and jump on board after the share has been moving, however they will quickly learn the error of their ways. A beginner has an excuse, they do not know any different, but even more experienced traders are caught in this trap.
There are a huge range of opportunities that you can trade, more than you would have capital to follow and there are always other trades waiting around the corner. Ensure you follow your strategy and stick to your trading plan. This can help you avoid chasing trades which can be an expensive exercise.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability. - 23199
OOPs, I Pushed The Wrong Button
One of the first mistakes that is very common is pushing the buy button when you meant to sell or the sell button when you meant to buy. This often happens when exiting a position especially if you are trading both long and short. Instead of exiting the position you end up with a position size twice what you started with.
When you place a trade immediately check your open positions. By doing this you will pick up the mistake before it costs a significant amount of money. Not realising that you have an open position can be far more expensive.
Forgotten Stops
If you exit an order when you are watching the screen, make sure you remember your stop orders. Assuming you have placed a stop on the trade, which you always should, then you must cancel the order if you exit before the stop is triggered. Forgetting your stops is a risky exercise and if the stop is triggered it could be hours before you know that the order was traded. The market may move in your favour, but it is not something I would like to gamble on.
Before exiting the trading platform at the end of a trading session make sure you check your open positions match your stop loss orders to avoid any surprises when you next enter your trading platform.
Oops, Too Many Zeros
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
To avoid losing money many traders will reason that a tight stop will protect them, but placing a stop loss too tight can result in the trader being exited prematurely from the trade. The trader has created exactly what they wished to avoid.
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.
Follow The Rules
The last common CFD mistake is to enter a trade when you know that you should not. It is common for new traders to chase a share and jump on board after the share has been moving, however they will quickly learn the error of their ways. A beginner has an excuse, they do not know any different, but even more experienced traders are caught in this trap.
There are a huge range of opportunities that you can trade, more than you would have capital to follow and there are always other trades waiting around the corner. Ensure you follow your strategy and stick to your trading plan. This can help you avoid chasing trades which can be an expensive exercise.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability. - 23199
About the Author:
Jeff Cartridge started trading CFDs in 2002 when they first launched in Australia and co-created the website LearnCFDs.com A Simple Timeless Method for Huge GainsCFD Trading Strategy
posted by X - Men @ 2:58 AM
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