The best way to lose money in trading.
How would you like to lose every single trade you took up? How many times can you afford to lose? Yet so many traders experienced as well as new consistently make this same mistake. Yes every day, every trade we find traders making this mistake!
Now this applies to all trading. You could be a bonds trader, or a stocks trader. Maybe you trade forex or options or futures. This mistake affects you as much as the other trader. No matter what market you are currently trading in, if you don't realize this mistake and take steps to correct it, your profits will be sporadic at best. Worst case would be that you lose every single cent you invested to fund your account.
I am sure at this point in time you are at the edge of your seat, eager to know what this crucial mistake that you have been committing is. In fact you most likely know of it already!
When you are in a trade are you trading with emotion or are you trading with detachment. This is no new age religion I am talking about, but mechanical trading. There will be folks in the market that say, they follow their gut feeling to trade. Yes they might make a quick buck, but in a longer period this feeling seems to be less effective and they end up losing all their money.
When you as a trader start a trade, do you set your pre-defined profit targets and your pre-defined losses? How often do we as traders only look at the possible profits and over-look the possible losses? My answer is almost every time.
Human nature is made to be greedy and selfish. Now when harnessed properly these two forces can be powerful tools for the smart trader. Find out more in my free e-book.
To be a mechanical trader is not asking you to be an unthinking machine. A mechanical way of trading is to ensure that you follow the rules YOU have set out before you entered each and every trade! I am assuming that you actually have a trading plan all set up if not stop all trading and go get one. If you have no idea how to set up a trading plan download my complimentary e-book for free and learn.
To be able to trade mechanical needs discipline, not allowing your emotions get the better of you needs strength of will. Make money consistently by practicing correct trading habits and ensure you will never need to lose money unnecessarily again.
Dr. Joshua Geralds is a successful Investment Specialist with over twenty years experience increasing the income of people world wide. For a limited time get his free Money Management to a Million Dollars e-course here: http://www.pipsalot.com