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.
Is it Buy, Or Sell
It is not unusual for a trader to push the wrong button when entering or exiting from a trade. It is most common to push sell to get out of a short position, when you really meant to buy. Sometimes it just gets so confusing, so instead of being out you end up with double the quantity.
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
Often a trader will decide to exit a position at market, because they do not like the current price action. But if they have the discipline to always use stops then the stop order must be cancelled after the trade is exited. If it is left open the order can be executed and it could be many hours before you realise that this has happened. The trade may or may not go in your favour, how it plays out is an unknown, but certainly not something you want left to chance.
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.
Checking your open position after the order is placed should enable you to pick up this error as the size of the position will be very different to your normal trading size.
Stops Too Tight, You Lose
If a stop is placed too close to the current price, it is very likely that the stop loss will be triggered by normal price movement. While the trader that places a tight stop is attempting to avoid losing money, this is often the end result of their actions.
When you decide where to place your stop order you must place it far enough away from the price to avoid getting caught up in the normal range of movement. Place it where it will only be hit if your view turns out to be wrong.
Discipline Is Essential
If you can overcome the previous CFD mistakes there is still one more that you have to master. That is your own behaviour. It is not uncommon for beginning traders to enter a share once it is climbing rapidly, but this usually has disastrous results. However it is not only new traders that get caught by this idea, with more experienced traders also falling for this simple trap.
The market offers an unlimited supply of trading opportunities, far more than you could ever possibly trade. If you miss a trade today, there will be another trade along soon enough. By following a trading plan you can avoid getting caught by impulsive trades, which can prove to be costly.
Avoiding these silly and costly mistakes will certainly improve your trading results. It is not necessary to throw away money unnecessarily. - 23221
Is it Buy, Or Sell
It is not unusual for a trader to push the wrong button when entering or exiting from a trade. It is most common to push sell to get out of a short position, when you really meant to buy. Sometimes it just gets so confusing, so instead of being out you end up with double the quantity.
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
Often a trader will decide to exit a position at market, because they do not like the current price action. But if they have the discipline to always use stops then the stop order must be cancelled after the trade is exited. If it is left open the order can be executed and it could be many hours before you realise that this has happened. The trade may or may not go in your favour, how it plays out is an unknown, but certainly not something you want left to chance.
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.
Checking your open position after the order is placed should enable you to pick up this error as the size of the position will be very different to your normal trading size.
Stops Too Tight, You Lose
If a stop is placed too close to the current price, it is very likely that the stop loss will be triggered by normal price movement. While the trader that places a tight stop is attempting to avoid losing money, this is often the end result of their actions.
When you decide where to place your stop order you must place it far enough away from the price to avoid getting caught up in the normal range of movement. Place it where it will only be hit if your view turns out to be wrong.
Discipline Is Essential
If you can overcome the previous CFD mistakes there is still one more that you have to master. That is your own behaviour. It is not uncommon for beginning traders to enter a share once it is climbing rapidly, but this usually has disastrous results. However it is not only new traders that get caught by this idea, with more experienced traders also falling for this simple trap.
The market offers an unlimited supply of trading opportunities, far more than you could ever possibly trade. If you miss a trade today, there will be another trade along soon enough. By following a trading plan you can avoid getting caught by impulsive trades, which can prove to be costly.
Avoiding these silly and costly mistakes will certainly improve your trading results. It is not necessary to throw away money unnecessarily. - 23221
About the Author:
Jeff Cartridge is a private trader from New Zealand and co-created the website LearnCFDs.com Learn How to Beat CFD Brokers at Their Game
posted by X - Men @ 2:31 AM
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