Dumb Things CFD Traders Do
There are certain silly mistakes that all traders have made at some point in their trading careers, even though there are simple techniques that can be used to avoid them.
Buy or Sell, Which Button Was That
Maybe you have pushed the wrong button when you try to exit from a position. Pushing buy instead of sell is quite common, especially if you trade rising and falling markets. This is most common on the exit and rather than getting out of the trade you end up with twice as much.
It is easy to catch this mistake by making a habit of looking at your open positions immediately after placing the trade. If you find that you have made this mistake it is easily rectified at low cost if you act now. Not realising that you have an open position could be a very costly exercise.
Forgotten Stops
You may not like the price action and decide to exit your trade. If you do make sure you cancel your stop loss order. The stop order you placed when you entered the position will still be sitting there waiting for the market to move to the stop price. If you leave the order open it could be traded many hours later and the outcome of the trade is unknown. Trading is not about luck, it may move in your favour, but about discipline to follow your strategy.
When it comes time to close your trading platform look at both your open positions and also check your live or working orders. Make sure there is a match between the two to ensure you are not surprised next time you go to trade.
Was That $10000 or $100000
Assuming the trader has the discipline to calculate their position size in the first place, sometimes it is possible to get it wrong. The most common error here is not usually bad maths, it is incorrectly entering the number of zeros. Too many zeros and your risk increases 10 times, too few and your profits evaporate.
When you look at the open positions after you place an order you should be easily able to verify that the order you placed was the correct size.
Avoid Placing Your Stops Too Tight
If a stop is placed too close to the current price, it is very likely that the stop loss will be triggered by normal price movement. While the trader that places a tight stop is attempting to avoid losing money, this is often the end result of their actions.
Stops must be placed far enough away from the price action to exit you from a position if your trade view turns out to be wrong. Give the underlying share room to move to avoid getting caught by this CFD mistake.
Follow The Rules
Even experienced traders can be caught out by chasing a share as it moves rapidly. While it is more common amongst people new to trading it still can catch out the more experienced traders. Following this strategy is usually a recipe for disaster and also can be one of the hardest mistakes to overcome.
There are a huge range of opportunities that you can trade, more than you would have capital to follow and there are always other trades waiting around the corner. Ensure you follow your strategy and stick to your trading plan. This can help you avoid chasing trades which can be an expensive exercise.
While no trader will be right every time, these silly mistakes can be easily avoided or caught before they have any real impact on your account. - 23162
Buy or Sell, Which Button Was That
Maybe you have pushed the wrong button when you try to exit from a position. Pushing buy instead of sell is quite common, especially if you trade rising and falling markets. This is most common on the exit and rather than getting out of the trade you end up with twice as much.
It is easy to catch this mistake by making a habit of looking at your open positions immediately after placing the trade. If you find that you have made this mistake it is easily rectified at low cost if you act now. Not realising that you have an open position could be a very costly exercise.
Forgotten Stops
You may not like the price action and decide to exit your trade. If you do make sure you cancel your stop loss order. The stop order you placed when you entered the position will still be sitting there waiting for the market to move to the stop price. If you leave the order open it could be traded many hours later and the outcome of the trade is unknown. Trading is not about luck, it may move in your favour, but about discipline to follow your strategy.
When it comes time to close your trading platform look at both your open positions and also check your live or working orders. Make sure there is a match between the two to ensure you are not surprised next time you go to trade.
Was That $10000 or $100000
Assuming the trader has the discipline to calculate their position size in the first place, sometimes it is possible to get it wrong. The most common error here is not usually bad maths, it is incorrectly entering the number of zeros. Too many zeros and your risk increases 10 times, too few and your profits evaporate.
When you look at the open positions after you place an order you should be easily able to verify that the order you placed was the correct size.
Avoid Placing Your Stops Too Tight
If a stop is placed too close to the current price, it is very likely that the stop loss will be triggered by normal price movement. While the trader that places a tight stop is attempting to avoid losing money, this is often the end result of their actions.
Stops must be placed far enough away from the price action to exit you from a position if your trade view turns out to be wrong. Give the underlying share room to move to avoid getting caught by this CFD mistake.
Follow The Rules
Even experienced traders can be caught out by chasing a share as it moves rapidly. While it is more common amongst people new to trading it still can catch out the more experienced traders. Following this strategy is usually a recipe for disaster and also can be one of the hardest mistakes to overcome.
There are a huge range of opportunities that you can trade, more than you would have capital to follow and there are always other trades waiting around the corner. Ensure you follow your strategy and stick to your trading plan. This can help you avoid chasing trades which can be an expensive exercise.
While no trader will be right every time, these silly mistakes can be easily avoided or caught before they have any real impact on your account. - 23162
About the Author:
Jeff Cartridge is the author of Supercharge Your Trading with CFDs and co-created the website LearnCFDs.com Discover How to Triple Your Profits With Less Effort CFD Trading Strategy
posted by X - Men @ 2:53 AM
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