Some Mistakes that Day Traders Should Avoid (Part 2)

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As a beginner trader, it is always important that you have enough weapon of knowledge before running on a trading quest in the market because being equipped with essential ideas is already a success. The market can be risky, but jumping into the market without a single knowledge of it is riskier. Always make yourself educated in order to meet a profitable day trading experience.

If you are wondering what other mistakes a day trader can commit, this article will give you the answer. Here is another list of mistakes that you, as a day trader, can commit, and, after reading this article, should avoid. Read on and make yourself cognizant.

1. Over-Leveraging Positions

If you are just beginning to day trade, never take position sizes that are too big for your account. It is not a good idea to go in single trades with half or the total sum of your money because the thought of utilizing maximum leverage in order to make the maximum possible on a trade could lead you to lose a maximum possible if you are wrong. Do not risk your money. As a possible solution, you can try taking trades with 5 percent to 10 percent of your account and abstain from borrowing money from brokers. Another important reason to dodge over-leveraging is it can eliminate your buying power and can cause you to miss other potentially lucrative trades.

2. Over-trading out of Boredom

When the market is performing slow or the volume is not strong it’s easy to be involved in a trade compelled out of boredom. You are way safer to keep self away and stay on the sidelines than to risk taking a loss that can cause you a setback.

3. Not Learning from Mistakes

Some people commit mistakes and then continue to make the same mistakes over and over. As a trader, you have to learn from all the mistakes you have made in the past and make the necessary adjustments to increase your knowledge and develop your trading skills. Just like anything else in life, you get better by doing something.

4. Not Setting Limit Orders

Setting market orders mean letting the market maker fill your order where they please. A limit order helps you make sure you get filled at the cost you want. Sometimes, if you are seeking to get filled quickly, a market order can be beneficial to you. For instance, if you are long and negative news suddenly shows up, you would need an immediate exit before the selling takes over.

5. Misunderstanding Margin Rules

Always make sure that you completely understand all margin requirements and Securities and Exchange Commission regulations so you can avoid compelled buy-ins from brokers, margin or day trade calls, and trading limitations.

6. Trading without Real-time Software

In order to trade successfully, you need to have a real-time software. You might find it hard to understand at first, but once you learn and get comfortable, you will realize that you cannot trade without it. The rapidity at which you take entries and exits, the access to level 2, charting, and streaming news is important and a must.

7. Revenge Trading

This happens when you’ve had a hard time trading a particular stock and you attempt to continue trading it. Attempting to do this can cause you more money. If it is not working with a certain stock, just get rid of it and place it to the no-trade list.

8. Having a Negative Mindset

When you have a negative mindset, you are prone to negative things in life. Pay close attention to your thoughts and the words you utter. Assessing thoughts and words can give hints to what kind of energy you or anyone else is giving out to the universe. Nature will grant whatever you want if you force it to through strong positive thought vision and then followed by action. Wake up thinking that you do great this day. Believe it wholeheartedly and then go accomplish it.

9. Trading Too Many Stocks at Once

Look for one or two stocks that have nice volatility and trade them in and out all day. Diversification is a great way for investing because you do not need to worry about the daily volatility of the market as you are holding the stock for the long term. But, for day trading, it is much too distracting to have to worry about the daily movements of so many different stocks. It is just too much to handle, so keep it simple.

10. Failing to Take Accountability for Your Mistakes

Take responsibility for your bad trades and learn from them. Nobody forces you to push the button on any trade idea as it is your decision alone. Everyone, including professionals, is going to make mistakes and have losing trades at times. The key is learning from these mistakes, being strong and consistently improving your game. Trading success is sure to follow.

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