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20 Most Common Trading Mistakes: And How You Can Avoid Them


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20 Most Common Trading Mistakes: And How You Can Avoid Them

Kel Butcher

ISBN: 978-1-742-16929-3 June 2009 Wrightbooks 224 Pages


You're a trader. You live a life of glamour, fast cars, leisure and luxury -- everything you've ever dreamed of ...

Of course, that's until you discover that trading can be brutally difficult. If you play the trading game, you are going to make mistakes -- maybe even some like these:

  • agonising endlessly over when to enter or exit a trade
  • trading like a maverick, risking too much of your capital
  • beating yourself up when a trade goes against you
  • losing $1 million in a single trade
  • clicking 'buy' instead of 'sell'
  • buying 10 000 units when you only meant to purchase 1000.

20 Most Common Trading Mistakes reveals market mishaps from some of the biggest names in trading. Everyone - from stellar traders to complete novices -- can use help learning how to trade in the black. Why not learn from the masters how to turn blunders into profit?

Acknowledgements ix

Introduction xi

1 It’s not my fault — I didn’t even know it was a mistake!

Mistake 1: defining a trading mistake (with Dr Van Tharp) 1

2 The horse goes in front of the cart

Mistake 2: jumping into the market before having learned the required skills (with David Hunt) 13

3 Failing to plan is planning to fail

Mistake 3: not having a clearly defined and documented trading plan (with Justine Pollard) 23

4 Get that monkey off my back

Mistake 4: not trusting your own ability (with Louise Bedford) 35

5 Nice knowing me

Mistake 5: not aligning your trading strengths (with Brett Steenbarger) 45

20 Most Common Trading Mistakes

6 Easy come, easy go

Mistake 6: overcomplicating the entry process (with Russell Sands) 57

7 Complex complexity

Mistake 7: making trading too complicated (with Davin Clarke) 65

8 Too many contracts, not enough shares

Mistake 8: not understanding money management (with Ryan Jones) 73

9 1000 per cent return in three days — sure, it happens all the time

Mistake 9: paying good money for a dodgy trading ‘system’ (with Wayne McDonell) 87

10 Heads, I win; tails, you lose!

Mistake 10: failing to understand the numbers (with Gary Stone) 97

11 Bet big to lose big

Mistake 11: misusing leverage and margin (with Christopher Tate) 111

12 What’s the time, Mr Wolf?

Mistake 12: confusing time frames and trading strategies (with Jake Bernstein) 125

13 Where the ^!*# is the exit?

Mistake 13: not having a clearly defi ned exit strategy (with Larry Williams) 135

14 But the guy on TV said it would go up tomorrow!

Mistake 14: listening to the advice of media and others (with Glen Larson) 147

15 Half price and still too expensive

Mistake 15: averaging down (with Tom Scollon) 157

16 I’m right! The market’s wrong

Mistake 16: lacking discipline (with Dr Harry Stanton) 165

17 The emotions of a robot

Mistake 17: emotive and subjective trading (Kel Butcher) 173

18 Overworked and underpaid

Mistake 18: overtrading (various) 185

19 Fat fingers, 10 000 too many, and busting trades

Mistake 19: operational errors (with John Robertson) 197

20 I’m sure I filed that somewhere …

Mistake 20: avoiding the paperwork (with Jason Cunningham) 207

Glossary 217

Index 225