One of the biggest mistakes many traders make is trading too often and not waiting for the best entry opportunity. It can be challenging to be patient when the market is constantly fluctuating, and it is tempting to enter a trade. However, professional traders have a clear trading plan and can wait for the entry point in line with their strategy.
Successful traders have experience using many strategies and understand which best suits their personality and lifestyle. In addition, a good understanding of the market can help them determine if the current conditions present profitable opportunities.
Unprofitable traders, on the other hand, react to market movements rather than following a strategy. Therefore, not having a straightforward trading process leads to failure. For example, a trader may feel that he has "missed the boat" and make an impulsive buy entry after the market has risen significantly. However, trading without a clear rationale will not lead to sustainable profits.
You can improve your trading by following some of the tips below:
Reduce the amount of time you spend monitoring the charts to eliminate overtrading. Taking fewer trades will reduce the number of losing trades and prevent a loss of confidence. Have a precise method of when to enter a trade to reduce stress.
Even if you have a trading strategy, it may take some time before you get an entry signal. Some traders cannot wait and enter a trade before conditions are favorable for entry. As a result, even though they have a profitable trading strategy, they are lowering the overall profitability by making extra entries.
Trading is a business, not a game
It is easy to buy and sell with modern trading platforms and enjoy trading like a game. However, treating trading as amusement can lead to poor performance and gambling. If you want to enjoy trading as a game, you should use a demo account.
Imagine how you will feel if you make a losing trade before you trade
It can be beneficial to remember past losing trades to avoid taking trades that are not part of your strategy. Reviewing failed trades and understanding the factors contributing to the loss will help you focus on making trades that your plan dictates.
Develop the ability to wait until the optimal entry timing
Define your trade plan before entering and resolve that you will follow the trade plan to make your entry. This way, you can focus on the best entry opportunity. Measure your trading performance by whether or not you follow your trade plan, not by the outcome of the trade.