daytradingskills

A monkey was carrying two handfuls of peas. One little pea dropped out. He tried to pick it up and spilt twenty. He tried to pick up the twenty and spilt them all. Then he lost his temper, scattered the peas in all directions and ran away.
– A Fable by Leo Tolstoy

There is room for bulls and bears in the marketplace, but pigs get slaughtered. – An old trading adage 

What happened to the monkey happens quite frequently with most new traders who shut shop even before their business has begun! Driven by desire to make quick money, they enter the market and soon lose their way in the sudden waves of market dynamics. The most important step in winning the trading game is to learn the art of avoiding big losses. Following are some of the beginner’s most glaring mistakes.

Putting the whole trading capital in individual trades is the fastest way to self destruction. Beginners should first either perfect their system through mock trading or try small trades only till they gain experience. Experienced traders make small trades and risk no more than 1 – 2 % on any single trade. Seasoned traders practice position sizing.

This is definitely among the major reasons why most trading careers end too soon. Even the best entry with the help of best technical indicators can not assure you “winning only” trades. Without a protective stop order, any sudden market swing in the wrong direction can turn you into a “stunned and paralyzed deer staring at the headlights”. So become wise while your trading capital is intact.

The trend is your friend except at the end when it bends. – Ed Seykota

As a trader you make money riding the market trend. If you have tendency entering the market “expecting the trend to change” and can’t come back to reality even when the market defies your wishful thinking, you have a serious problem that needs immediate remedy.

Internet is filled with trading “experts” who sell “fail-proof” ideas which make trading look like a “get rich quick” home business that any one can pick up. Nothing can be far from the realities of trading world. It is a serious business that needs proper education and emotional training. So, do your home work carefully before taking the plunge.