- Failing to have a trade plan
The number one mistake that most day traders make is not having a trade plan and strict trade process. A trade plan is a set of rules that each trader must create. These rules allow the trader to be consistent and prevent unnecessary loss.
- Failing to place stop losses or cap risk
There is absolutely NO excuse for not placing stop losses or using max-loss protection on every trade you place. Along with position sizing this step is the most important to protect your profits and be a consistently profitable trader.
- Implementing consistent risk management
Knowing your numbers is a must in any business and trading is no different. When you consistently position size each trade identically you will capitalize on your winners and have reward:risk ratios in your favor with the losers. Trading is all about numbers and statistics. Position sizing assures those numbers are as accurate as possible so at the end of the day you stay in the black.
- Trading frequency
Since trading is about placing the odds in your favor, having enough trades is essential to be successful. That being said having too many trades will hinder your success rate and profit margins as well.
- Trading during the wrong times
Notice what trade times are best for your goals, the market, and the asset you are trading. Trading during the wrong times can lead to some of the worst trade executions possible.