Hi Friends Good evening hope all are you fine, So first of all Wishing all of you a very Happy Independence Day, here I am doing a short writeup on Trading related mistakes very commonly did by me or a common trader on the occasion of Independence day from whom I want to be free now!
So always I wondering that why I or common traders could not make it and after deep thinking on trading methods and trading psychology I found some mistakes from what I want to get rid of now sharing below.
⚡⚡⚡⚡ Don’t trade if your emotions aren’t aligning with what is on the screen.
If we are not super happy about entering, and you don’t fully accept the loss, don’t take the trade and Don’t ‘force’ something to work because it won’t.
Trade as if you are looking for buys and sells in your markup, This removes mental bias, and effectively emotion in trading.
⚡⚡⚡⚡ We focused too much on technical analysis.
You know that trading is 90% psychology, 10% technical, yet you don't focus on it.
Why is psychology so important, but people focus on technical analysis so much more? Because backtesting and focusing on the technical provide us with instant gratification. It feels good knowing what returns you would have gotten on that trade, over the past weeks, months, or even years. It's feels good to instantly know what you will get out of your backtesting session.
⚡ ⚡ ⚡ ⚡ Never chase missed entries.
Let’s say the market is in a nice healthy trend, making a series of higher highs and higher lows. And when you overlay the 20-day moving average over it, you notice the market bounce off the moving average quite a few times. You then get a buy signal near the moving average, but unfortunately, you missed the entry and are just watching the market go up without making any money from it.
Now, when you look at the chart, the market is very far away from the 20-day moving average. So even though the market is currently in an uptrend, ideally you don’t want to be buying now because, from looking at your analysis, the market tends to pull back to the 20-day moving average. If you impulsively buy when the price is very far away from the 20-day moving average, when the price is overstretched and the market has been overbought, there’s a high probability the market will reverse or pullback, and you will most likely get stopped out.
We all miss entries and opportunities; it is completely normal to do so, and sometimes the market can give you a second chance to enter by coming back to your original level. If it does not and you completely miss the move, do not dwell on it; dust it off and move on. The markets are not going anywhere, and plenty more opportunities will come your way.
⚡⚡⚡⚡Overtrading
To avoid overtrading just we have to create a well Defined trading plan with setting the daily or weekly trade limits, so if you are observing that you are doing overtrading or compulsory trading just take a break make some strict rules and try to comeback with a committed risk management plan.
⚡⚡⚡⚡Respect your losses
Don't try to argue with market if your trades are going in wrong direction always respect your stop loss and understand that is the most important part of your trade from which you can avoid the vanish of capital and trade capabilities because small losses always prevent from big losses to us. And somehow you should follow your targets too like a disciplined trader likewise if you are trading with 1:2 RR and after two consecutive stop loss if you will sit till target you will get back to your capital almost so never try to come out early believe your trading system.
Key Takeaway-:
Trading system is also like our health system which needs a checkup after sometime so that we can know the problems in time and get Freedom from it.
Best Regards- Amit Rajan
Happy Independence Day 2023
Jai Hind Jai Bharat
So always I wondering that why I or common traders could not make it and after deep thinking on trading methods and trading psychology I found some mistakes from what I want to get rid of now sharing below.
⚡⚡⚡⚡ Don’t trade if your emotions aren’t aligning with what is on the screen.
If we are not super happy about entering, and you don’t fully accept the loss, don’t take the trade and Don’t ‘force’ something to work because it won’t.
Trade as if you are looking for buys and sells in your markup, This removes mental bias, and effectively emotion in trading.
⚡⚡⚡⚡ We focused too much on technical analysis.
You know that trading is 90% psychology, 10% technical, yet you don't focus on it.
Why is psychology so important, but people focus on technical analysis so much more? Because backtesting and focusing on the technical provide us with instant gratification. It feels good knowing what returns you would have gotten on that trade, over the past weeks, months, or even years. It's feels good to instantly know what you will get out of your backtesting session.
⚡ ⚡ ⚡ ⚡ Never chase missed entries.
Let’s say the market is in a nice healthy trend, making a series of higher highs and higher lows. And when you overlay the 20-day moving average over it, you notice the market bounce off the moving average quite a few times. You then get a buy signal near the moving average, but unfortunately, you missed the entry and are just watching the market go up without making any money from it.
Now, when you look at the chart, the market is very far away from the 20-day moving average. So even though the market is currently in an uptrend, ideally you don’t want to be buying now because, from looking at your analysis, the market tends to pull back to the 20-day moving average. If you impulsively buy when the price is very far away from the 20-day moving average, when the price is overstretched and the market has been overbought, there’s a high probability the market will reverse or pullback, and you will most likely get stopped out.
We all miss entries and opportunities; it is completely normal to do so, and sometimes the market can give you a second chance to enter by coming back to your original level. If it does not and you completely miss the move, do not dwell on it; dust it off and move on. The markets are not going anywhere, and plenty more opportunities will come your way.
⚡⚡⚡⚡Overtrading
To avoid overtrading just we have to create a well Defined trading plan with setting the daily or weekly trade limits, so if you are observing that you are doing overtrading or compulsory trading just take a break make some strict rules and try to comeback with a committed risk management plan.
⚡⚡⚡⚡Respect your losses
Don't try to argue with market if your trades are going in wrong direction always respect your stop loss and understand that is the most important part of your trade from which you can avoid the vanish of capital and trade capabilities because small losses always prevent from big losses to us. And somehow you should follow your targets too like a disciplined trader likewise if you are trading with 1:2 RR and after two consecutive stop loss if you will sit till target you will get back to your capital almost so never try to come out early believe your trading system.
Key Takeaway-:
Trading system is also like our health system which needs a checkup after sometime so that we can know the problems in time and get Freedom from it.
Best Regards- Amit Rajan
Happy Independence Day 2023
Jai Hind Jai Bharat