Top Five Stupid CFD Trading Mistakes
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.
Buy or Sell, Which Button Was That
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.
This mistake is easily caught by checking in with your open positions after you place a trade to ensure that the trade you have placed did what you expected. If caught immediately this mistake is easily rectified and is likely to only cost a small sum for a stupid mistake. If you do not realise your mistake and the position is left open this can have disastrous consequences for your account.
Remember Your Stops
You may not like the price action and decide to exit your trade. If you do make sure you cancel your stop loss order. The stop order you placed when you entered the position will still be sitting there waiting for the market to move to the stop price. If you leave the order open it could be traded many hours later and the outcome of the trade is unknown. Trading is not about luck, it may move in your favour, but about discipline to follow your strategy.
To catch this mistake, always check your open trades and stop losses before closing your trading platform. This way you will know what trades you have open and avoid any unpleasant surprises next time you trade.
Was That $10000 or $100000
Assuming the trader has the discipline to calculate their position size in the first place, sometimes it is possible to get it wrong. The most common error here is not usually bad maths, it is incorrectly entering the number of zeros. Too many zeros and your risk increases 10 times, too few and your profits evaporate.
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.
Tight Stops Create Losses
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.
Stops must be placed far enough away from the price action to exit you from a position if your trade view turns out to be wrong. Give the underlying share room to move to avoid getting caught by this CFD mistake.
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.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability. - 23212
Buy or Sell, Which Button Was That
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.
This mistake is easily caught by checking in with your open positions after you place a trade to ensure that the trade you have placed did what you expected. If caught immediately this mistake is easily rectified and is likely to only cost a small sum for a stupid mistake. If you do not realise your mistake and the position is left open this can have disastrous consequences for your account.
Remember Your Stops
You may not like the price action and decide to exit your trade. If you do make sure you cancel your stop loss order. The stop order you placed when you entered the position will still be sitting there waiting for the market to move to the stop price. If you leave the order open it could be traded many hours later and the outcome of the trade is unknown. Trading is not about luck, it may move in your favour, but about discipline to follow your strategy.
To catch this mistake, always check your open trades and stop losses before closing your trading platform. This way you will know what trades you have open and avoid any unpleasant surprises next time you trade.
Was That $10000 or $100000
Assuming the trader has the discipline to calculate their position size in the first place, sometimes it is possible to get it wrong. The most common error here is not usually bad maths, it is incorrectly entering the number of zeros. Too many zeros and your risk increases 10 times, too few and your profits evaporate.
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.
Tight Stops Create Losses
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.
Stops must be placed far enough away from the price action to exit you from a position if your trade view turns out to be wrong. Give the underlying share room to move to avoid getting caught by this CFD mistake.
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.
These simple mistakes can be eliminated by learning a number of simple habits that can dramatically improve your profitability. - 23212
About the Author:
Jeff Cartridge is a private trader from New Zealand and co-created the website LearnCFDs.com Discover Ways to Make Serious Money with a Small Investment CFD Trading Strategy
posted by X - Men @ 2:44 AM
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