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Tradesta

Sure way to lose in trading

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I have listed a few things that all traders have gone through and learned from.

 

"First you lost, next you learn not to lose, then you make money!"

 

1. Using small stops will definitely stop you out most of the time. You need to understand the volatility of the instrument you are trading.

 

2. Trading on a feeling of "it just feels right" is a sure way to lose. You have not defined your risk parameters and exit points. Might as well hit the casinos.

 

3. Overtrading and lacking discpline. If youre in it for the action seek help before you start trading.

 

4. Risking more than your trading capital. For the eminis, I will trade 1 contract per $10,000. Some brokers will let you trade 10-20 contracts per 10K.... not recommended.

 

5. Not understanding the bigger picture. Price would be in a downtrend ina 3min timeframe but an uptrend in a 60 timeframe.

 

6. Psychological makeup. You must be prepared to enter trading. Most new traders take it too lightly and do not understand the amount of hard work it takes to trade successfully.

 

 

I know there are alot more. So please feel free to elaborate! :)

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Trading is 30% mechanical, 170% pyschological. The true holy grail is mastery of self. Understand your psychological elements and trade accordingly. Without self-knowledge, traders are destined to fail. Of course, mastery takes a lifetime. The market is your teacher. Learn from her everyday.

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What is required in trading:

 

1. Understanding support/resistance levels

2. Know the bigger picture using the larger time frame. Alot easier trending with the trend then against it.

3. Understanding what sectors and stocks are connected with each other. For example: if crude oil goes up, transport stocks get hit

4. Do not overtrade

5. Do not risk too much

6. Specialize in your stocks

7. Always use stops

8. Don't jump the gun!

9. Buying a stock because it was mentioned in a chat room

 

Avoid the costly mistakes!

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Why do most people think it is easy to make money in the markets? It seems like more money is made selling books and software than trading the markets. Any opinion?

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