I am 100% certain that I have made each of these statements myself at some point in my trading journey. That's why I can explain to you how ridiculous each of them is. I will also show you how you can correct your mistakes. Before we begin, don't take everything personally. What I say may seem harsh at times, but it is true.
I will refund everything on the next transaction
If you have ever said this, then you are on your way to becoming a martingale trader.
Trying to make too much profit on one trade is the reason why so few traders consistently make money from the market. Most of the professional traders I've talked to don't risk more than 2% of their capital on every trade.
Remember that if you risk 10% of your account on every trade, it only takes 5 losing trades in a row to lose 50% of your account. Then you will need to earn 100% to return to breakeven.
Remember that only the best traders in the world earn 100% per year. As a beginner trader, you need to focus on losing as little as possible.
My broker hits my stops
A classic statement for beginners. Can brokers hit your stops? Certainly. But most brokers won't do this because they don't want to deal with the headache if they get caught doing it.
A more likely scenario is that you set your stop too narrow or made a bad trade. Stop blaming everyone for your losses. Take responsibility and find out what really happened.
I have lost 5 trades in a row so I have to make a big profitable trade
The notion that you are unlucky is complete nonsense. Have you ever lost more than 10 trades in a row? I had these series. And if I continued to risk more after each loss, I would lose my deposit.
So don't count on your next trade to be a winner just because you're on a losing streak. You can have 10 losing trades in a row.
You can enter the market late, while there is still an opportunity
Have you ever tried to squeeze 1R out of a trade when there really isn't any? For example, on the chart we see a beautiful pin bar . But let's assume that you didn't notice it, and the price is already moving without you.
You may be tempted to open a trade a little later. However, this is not the best option. Remember, there will always be more opportunities in the market. Stay patient.
I completely rely on someone else's trading strategy
You should get enough knowledge in trading, but do not completely trust other people's strategies.
There are many reasons why learning another person's trading system is only half the success in trading:
- It may not work for your personality.
- You will probably have to customize it for yourself.
- You may need to put together several trading systems.
So learn everything you can from as many traders as possible. But their method of trading is not the only path to success.
The news ruined my deal
In fact, it's only your fault. A more likely scenario is that you forgot to check the news before making a trade. Be honest with yourself. If you are a purely technical trader, you just have to accept the fact that stop losses happen from time to time.
I need a cool monitor or computer for trading
I have found that if someone thinks too much about technology, they forget about other more important things. For example, backtesting or filling out a trading journal .
In one forum, I saw a lot of discussions on the forums about choosing the ideal computer for trading. But the reality is that most mid to high end consumer computers are more than adequate for most traders.
I will exit if the price returns to breakeven
This is the classic Find and Pray trading strategy.
If you ever pray for a trade to break even, then you are probably the proud owner of a losing trade. So if you find yourself relying too much on this in many of your trades, you need to rethink your entire trading process and get used to the risk.
I don't need a trading journal
I have struggled with the trading journal for many years, so I can speak from my own experience. Keeping a trading journal is the only way to understand what mistakes you are making and what trades you are missing.
Without it, you will repeat the same mistakes. One thing I found was that I was taking quite a few profitable trades but getting out of the market too early. This discovery alone greatly influenced my results.
I'm not going to wait for the candle to close
A pin bar cannot be a pin bar until the candle has closed. Wait a bit and wait for a quality pattern to appear on the chart. These templates give you an edge. Without them, you are just gambling.
Trading psychology is not needed, I just need a better system
Yes, the classic "holy grail" mentality. If you've ever said anything like that, you're probably just learning to trade. Trading psychology is the most important element in trading. You can listen to me or learn the same lesson in 5 years.
The risk I take depends on how confident I am in the trade.
There are traders who will risk up to 10% on a trade they are very confident about. But for most traders, this is a recipe for disaster. For 98% of traders, a fixed risk management system is the most suitable option.
I don't understand how it works
If you can't figure out how a trading system works within a day or two, you probably won't succeed. In my experience, the best trading systems should be easy to learn and understand.
I will use proper risk management as soon as I bring my deposit to an acceptable level
Do you think you are going to bring your deposit to a “decent level”? Proper risk management is the cornerstone of profitable trading. Be patient.
I'm about to quit my job because I want to succeed as a trader
It may work for other endeavors in your life, but it is the worst thing a trader can do. The reason is that trading is a very complex psychological profession.
If you are forced to pay off the loan every month, you will not have good trading. Keep in mind that if you can earn 1% per month when you're just starting out, you're good to go.
Find out how much of an account you will need to cover your living expenses. The figure turned out much more than you thought. Right?
If the system is running on a daily chart, I will make 10 times more money on a 30 minute chart
In fact, trading on shorter time frames is a completely different matter. You can make a profit on any timeframe, but you will have to understand the nuances of each of them.
Trading on smaller timeframes usually results in overtrading. Do not think that all trading systems can be traded on all timeframes. Learn your working timeframe and stick to it.
Stop losses are for the weak
You must have a stop loss . The only way to succeed is to learn to limit your losses and let your profits run. Using a stop loss is not a weakness, but a necessity.
I'm going to fully automate my trading
It's possible. But I believe that only a very small fraction of traders can fully automate their trading. Why?
I believe that your mind needs to be tuned in a certain way to truly understand the meaning of automated trading. It is generally easier to create a profitable manual trading system and automate it than to start with an automatic system from the beginning.
You can also perform incremental automation, which can make your job easier, but still gives you a lot of control.
It was so obvious, how did I miss this deal?
You will not be able to enter every trade. So relax and let them happen. Right around the corner there is another possibility. Thinking like this will only lower your self-confidence and likely cause you to miss out on your next trading opportunity.
This attitude could only be obvious after the fact. Keep this in mind.
A good exercise is to scroll the graph to the point where the adjustment occurred. How obvious is it now? If so, find out why you missed it.
My last trade was a failure, I'm a loser
You need to learn to forgive yourself. Trading requires mental toughness. This is the only way to move forward. This is a lesson that I have learned for a very long time. You must always remain optimistic. Nobody else will do it for you.
Trading is profitable and losing trades. If there was only one way to win, we would call trading money printing. Unfortunately, losses are part of the deal. So stop trying to figure out how to turn lead into gold. A losing trade can also be a good one.
Why didn't I decide to make this deal?
The answer is that you do not trust your trading system. To gain more confidence in your system, you should test your strategy before ever risking money. This will give you more confidence in what you are doing.
I'm on a roll, it makes sense to increase my risk
This is the "hot hand" syndrome, which usually results in the return of all your profits for the month. Or maybe even a whole year.
While the trend may continue, it is much more likely that it may reverse. To prove it to you, take any trading system and test it on history.
Trade with regular risk first. Then increase your risk by 50% when you win 3 trades in a row. Compare results.
My system is fully backtested, it should show profit
There can be a big gap between backtesting results and real trading results. Some of the reasons for this could be:
- You are not ready to make trades in real time
- Market conditions have changed
- Your backtesting used too few periods.
- Your actions with real money can be very different from your actions with play money.
This is why you also need to forward test the trading system after backtesting it.
I'm going to get rich with this trading robot
I went through the phase of buying trading robots, like many others. In general, I earned quite a bit of money from the robot.
But in the end I decided to stop using it. The reason is that the creators changed the "optimal" settings every month. It didn't suit me.
The point is, if you haven't designed the robot and you don't know how it works, then you won't be able to know when it will stop working.
Think about it for a minute and I think you will understand that all commercial trading robots are designed to fail.
Before entering a trade, I need to be absolutely sure that it will be profitable.
This is what people with left hemisphere dominance usually say. They will need 5 different types of confirmation before they can enter a trade. This usually means they have 20 indicators on their charts and watch the news so they can always be confident.
Trading is essentially managing the unknown. The sooner you understand this, the sooner you will do whatever is necessary to succeed.