Silly Mistakes CFD Traders Make
I am sure that if you have traded before you have made at least one of these dumb mistakes at some point in your trading career. It is very easy to avoid the mistakes by developing a few simple habits.
OOPs, I Pushed The Wrong Button
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.
Remember Your 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.
Was That $10000 or $100000
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
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.
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.
Discipline Is Essential
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.
While no trader will be right every time, these silly mistakes can be easily avoided or caught before they have any real impact on your account.
Filed under: Uncategorized
