All traders lose money, even experienced ones. So how can you limit and stop the behaviours that lose traders money so as you keep all of your profits!
After all, the reasons why traders lose money aren’t random. They are predictable and usually repeated regularly. If you know how you’re losing money (and why you act that way) – then you can begin to stop that behaviour that is losing you money.
Here we go, 14 behaviours that lose traders money (so you can stop doing them 🙂 )
1. Not knowing trading jargon
If you work in a specific industry, you are probably aware of some jargons. Jargons are words that only people familiar with the field understand. Even when we’re tweeting in our spare time, we use them. Examples are words like “BTW”, “CYA” and more.
If a person isn’t aware of specific jargon, there won’t be communication. Trading jargon is complicated, I won’t lie. But to do anything – and I really mean ANYTHING – related to trading, you must know a few words.
People who don’t care to learn what it is that their money is going to do or where it’ll go will fail. You can’t just do one-day research, find out some place to trade and send your money to it. This is the typical behaviour of a loser.
First, read this, learn about the trading setups, the orders, and the market. Learn the meaning of the two words that might save your skin: stop loss.
2. Not knowing where to find information
If a trader doesn’t know where to find information, she is up for losing money. Many people think that trading knowledge is a secret encapsulated in the realm of finance universities.
That’s a lie.
You can find information anywhere nowadays. It’s as easy as taking a walk in the park with your dog. If you don’t feel safe when searching on Google, you can buy books written by experts or watch online courses. I have a whole article that helps you with that. This shouldn’t be a reason, excuse or behaviour that you lose money from!
3. Going blind sighted
Many traders start trading without any preparation. They never check information with different people, they don’t prepare a new mindset, nor take their personal issues to the stock market, and are not prepared to lose money.
Well, girls, compare this to when you’re pregnant and don’t prepare yourself to give birth. I’m pretty sure that, if you’re a mom, you probably spent months preparing for the arrival of the baby. The lack of preparation is one of the primary reasons why traders lose A LOT of money before actually profiting.
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4. Not getting inspired
We need inspiration for everything we want to start. I know some of you went on a shopping spree once because you were inspired by the pictures and tips of a fashion blogger.
Inspiration gives us a burst of interest. If a trader doesn’t get inspired, she will only lose money. Inspiration to trade = desire to win. Inspiration can be found in many places: written biographies, movies, TED Talks...
5. Making common mindset mistakes
Closing profitable trades too early and not accepting defeat are common mindset mistakes. It can take some time until you realise that your worst enemy is yourself.
Most people say success is 80% mindset and only 20 mechanics and trading is no different. Not managing your mindset is clearly a behaviour that traders lose money from.
I’m sure that someday you were feeling so ugly that you didn’t want to leave the house. This feeling, though, was on your mind. It kept you from doing the right thing.
Our minds trick us into denying new worlds like trading. We feel a mix of fear, laziness, delusion, FOMO, vanity, and other aspects that affect our mindset.
6. Lacking confidence
Many traders are afraid to hold a trade. Some give up too soon because the market is varying too much… This reflects a lack of confidence that every trader feels in the beginning.
However, this has to go someday. And it goes away when you study, prepare yourself, create a plan and stick to it. Confidence in trading is a thing you build together with experience.
7. Not treating trading like a diet
Trading is remarkably similar to a diet in many aspects. Loser traders ignore this fact, but you won’t, dear, you probably know how diets work. You know how hard they are. They require a plan made especially for our needs and a handful of discipline!
A lot of slip-ups can happen though, and they are all related to your behaviour. If you buy a pre-made diet or a pre-made trading plan, you’re off to a bad start. Focus on the process rather than on the results. Stick to the plan with discipline. Don’t expect immediate results.
8. Not using stop losses
Stop losses are one of the most important – if not THE most important – strategies to use when you have problems to reach a certain mindset and to follow the market fluctuations every day. You can place a stop-loss order with a broker to buy or sell once the stock hits a specific price. This way, you can buy them cheaper or sell them without losing more than planned.
9. Not taming FOMO
Fear Of Missing Out, or FOMO, is a behaviour that is directly related to trading losses because it makes us flee and enter a trade irrationally every time. It’s not only about how much you know and study. Without doubt FOMO is one of the most common behaviours that traders lose money from. FOMO can affect anyone at any time. To tame FOMO, you must feel safe and trust yourself.
It’s like when we’re on a relationship, if we have FOMO, it means that we’re not trusting our partner. When we’re afraid to lose the person we love, is because we are not sure about something.
It’s totally possible that there’s some kind of problem with the trading (and the partner), but it can also be only our imagination. The answer is to think as critically and objectively as possible.
10. Not using a trading journal
In my experience as a trader, I found that trading journals are not only relevant but that they are essential. Imagine a place where you keep all your trading logs, that compares your achievements, and that tells you where you’re doing right or wrong.
That’s what a trading journal does.
Traders who don’t track their achievements and losses tend to suffer more when they lose money. A simple behaviour that traders don’t do and it loses them money as they don’t learn.
May be you’d like to learn how using a trading journal helped double my profits!
11. Not checking my beginner’s course
You’re enjoying the tips on this article, right?
Then you’re going to love my 7-lessons course that teaches the basics of trading in a fun, appealing way for us girls. In this series, I’ll help you with trading charts, things you should know before trading. I also teach in there some things about the stock market, some rules you can implement on your “diet”, some platforms where you can trade, and a little about trading mindset.
12. Being afraid of day trading
People have many misconceptions about day trading.
I won’t lie, I had many bad experiences in day trading myself, but nowadays I’m thrilled by doing that. This is the story of how I started day trading. I’m currently a full-time trader, but I still keep on studying trading charts to check the trends of the market. Experience has made me conscious, and I don’t struggle to day trade anymore. Everything is a matter of practice and struggle. Fear certainly needs to change behaviours so that you don’t that lose money trading.
13. Not investing too
Trading is excellent for instant profit. It can secure you a significant income that can help you make a living. However, you need to think of the future as well. When we trade, we’re not being benefited by the magical power of compound interests.
What I mean is: people who only trade and not invest too are losing money in the long run. Earning a passive income or saving for your retirement is a way to feel safe amongst the wild world of day trading. Market fluctuations won’t affect you. The mindset problems are minimal.
14. Not learning from trading mistakes
It doesn’t make sense to repeat a mistake when trading. Well, actually it makes some sense if you’re not tracking every trade you make with your journal. We need to be critical thinkers and analyse what is that we’re doing wrong so that we don’t repeat. Are we rushing too much to sell a trade? Are we so eager to buy that we don’t wait for the right opportunity?
You only notice the pattern that’s making you lose money if you track your trades. This way, you’ll learn the points of your initial plan that need to be changed. You’ll notice a way to change to change behaviours that lose traders money.
Your trading behaviours that lose you money?
Do you behave or used to behave this way? Which aspect was the hardest to change?
Leave your thoughts on the comment section below and let us know!