Some things are just a no-do
- Forget to put a stop-loss
Every trader knows they can’t know everything. And the difference between knowing everything minus just some small pesky details is often the difference between no loss and a big loss. What I’m talking about is to guess not only the asset’s general movement, but the level at which it will be at any given time of the day, which is impossible unless you’re a fortune teller. Yet this is precisely the assumption you’re making when you don’t put a stop-loss. Traders make money out of steep price changes not couple days worth of winning streaks. They must buy low and sell high all the time, so that they can multiply their cash.
- Stop learning
‘I don’t need to know about China, EUR/USD is a shoo in’ is what many old time traders, lacking a convincing track record, would say to anyone advising them to explore new data to plug into their analysis. Yet they only get high-tide and low-tide results, because they are living in the past and refusing to believe the world has changed. Good traders are good readers. They upgrade their information all the time and act accordingly.
- Listen to opinions
Everything you hear about trading, other than official facts and stats is an Opinion. Depending on one’s biases you can interpret them in anyway you want. Suppose Fed chair Janet Yellen says she will Raise interest rates gradually. This is the most diversely interpreted claim in the history of trading. Bets range as far as the dollar will raise, because of the certainty she will raise them (she’s too hawkish) to the dollar will fall, because she doesn’t raise them quick enough and hence – she’s too dovish. This is what it’s all about if you don’t have an opinion of your own just wait a bit and build it up.