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Posted on January 14, 2016 06:05 pm
When trades go in our favour we are happy and successful but it takes 2 or 3 bad trades in a row to throw us off balance. As traders We should be aware of the addictive Habits which ruins the account capital.
I have highlighted some of the mistakes a trader does repeatedly.
Switching time frames:
Switching time frames to verify if the analysis is right or not after the trade is taken is a worst habit. Whatever analysis to be done is to be done before placing the trade. Once the trade is placed peeking in and out of different time frames to justify the entry is the first step to loose capital. If we are not confident about the entry why place a trade at all.
Another common mistake is to change the regular script very often. Just because the script you traded did not perform and another script did zoom good that particular day.
The moment you wish I should have traded that script or this script Be aware, we are on the path to blowing the account.
Trading is a probability game. There would be some phases of the market where any strategy would be vulnerable. The best we can do is to stay away rather hitting the market hard.
Switching Instruments & Lot sizes & Method:
The trade plan would be to trade with ‘X’ no of lots or to do in cash segment until equity rises to x %. Suddenly we get the idea of doing multiple lots in options such that we can make quick money or we have a feeling lets increase lot size in future and come out in 2 pts or 3 pts. Believe me increasing lot size erratically or changing instruments from cash to option to future or changing from day trade mind set to swing trade just because the trade did not go in our favour is sure shot way to blowing the account.
Bringing External Factors to table:
Just because we have a pending bill to pay or wanted to plan for a travel, trading forcibly without any obvious signals are again way to disaster. External factors should not disturb the running trades. An Example is we start setting huge targets or keep wider stop loss just because we wanted sure shot returns will spoil the account. Going against money management is going against us.
Trying our luck:
Trying our luck in markets or placing a trade based on news release or any act of gambling is hazardous to the account.
These points are just to remind you of the mood swings we go thru after the trade. By giving importance to mood swings we loose focus on technical analysis. So be alert. Whenever we find ourselves in a similar situation just get out for a small loss or profit and take a break. Markets are not being shut down forever. We always can come back with right mind set apply technical analysis and meet our objectives.
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Technical trader is born out of passion. Passion to learn, Trade and share about Technical analysis of the Stock Markets. We all know context is the important aspect of technical analysis. The Sustenance of a big move or a breakout of a particular stock depends on the context in which the breakout is happening. As a Traders coach we teach you how to develop context and trade the stock market. Especially the Nifty and the Bank Nifty.