How To Learn From Trading Mistakes And Pick Up Healthy Trading Habits?

Posted on 10th September 2018
How To Learn From Trading Mistakes And Pick Up Healthy Trading Habits?

While the novice traders are more likely to encounter trading mistakes, even the most qualified traders falter from time to time. Looking at the statistics on the trade in commodities, you would find that the majority of the people have lost money while trading because of the common blunders they make. Making mistakes while trading is not bad at all, but not learning from the same mistake and repeating it is the slip that people must avoid. Some of the trading mistakes that most traders make are as follows:


Mistiming trades is one of the mistakes that most inexperienced traders make. While traders over wait for the correct moment, they tend to miss out the correct point to enter or exit the trade. Mistiming entries and exits are the results of a lack of confidence in the methodology and succumbing to emotion that compels the trader to take hasty last-minute entry or exit decision, often streaming to the loss.


Traders get so lazy and impatient when it comes to preparation of the trading plan that most of them avoid preparing a trading plan which is the key to losing trades. A successful trader always plans his trade and writes his strategy way ahead. They also have an idea about the level at which they are going to enter the trade, thus enabling them to play their moves according to their plan.


A trader must have a solid plan that includes all the vital aspects of the trading before entering a trade. If a trader trades without planning, s/he is gambling. When a trader prepares a plan, s/he should be well-informed about their own expectation from their trade and their risk tolerances. However, a realistic expectation is the crux of a successful trading plan. The real test of a trader is when s/he needs to move and trade according to their trading plan and not get diverted from the thoughts or ideas of others.


Traders usually commit a mistake of trading in many markets at one time, which is when they tend to make losses. When the trading losses are piled up, it takes time to regain those amount. However, some traders come in hurry and trade too much, which further raises their losses. To avoid the problem of overtrading, you need to take time out from your trading. You need to analyze what happened during the trade and what went wrong. Knowing these things will help you regain focus for your future trades.


Discipline in trading is undoubtedly the most important character or trait of a trader. Lack of discipline often directs the trader to make trading mistakes like premature entry and exit, impulsive trading decisions, over-trading, along with violation of the risk management rules. Lack of discipline while trading often results in loss of more money than the anticipation of the trader.

Most people that have lost money have fallen prey to some of the mistakes they make while trading. Mistakes are a part of learning and the traders usually make such mistakes on the way to becoming an experienced trader. Some of the healthy habits that a trader must follow are as follows:


There are multiple things that separate a successful trader from others, but the most important aspect of trading is risk management. It is a fact that without capital, you cannot earn from trading but in order to achieve long-term success in trading, you should only risk a small percentage of your money on a single trade. One loss or a series of loss is a part of a trading game, but risking high amount of capital in a single trade can lead to losses which can eradicate your trading capital. Most traders’ advice to risk only 1-2 per cent of their capital in a single trade to reduce the risk to a large extent.


Emotions can lead to the irrational decisions that a trader would avoid normally. One of the main benefits of developing a trading plan is that a trader can eliminate emotions of greed and fear while trading. A trader must dot down important things like the risk tolerance level, their entry and exit points, stop loss level, etc. The trading plan assists traders to make quick trading decisions to take the benefit of opportunities that may arise in the fast-moving market.

Trading is a long-term activity which requires a dedicated effort as well as knowledge of the current market trend. Moreover, no strategy is effective all the time in every market, and you could lose money while trading. But following the above steps ensure that your gains from the trade are way above your loss from the trade.

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