“What was the cause of the biggest draw downs in your trading accounts?”
- Having no exit strategy
- Being certain of your opinion on the direction of an asset
- Arrogance that you know how the trade will turn out
- Thinking that you are invincible
- Over-trading
- Believing that the market must go down based on a guru’s prediction
- Letting a guru convince you that you shouldn’t place a hard stop, but to wait for a reversal
- Incorrect position sizing
- Greed that causes you to trade too big and risk too much
- Margin
- No Hedges
- Not understanding that a Bull Market has ended
- Poor risk management
- Not knowing that earnings were about to come out on your stock
- Your ego takes over your trade
- You decide not to take your initial stop loss
- Believing a losing trade just has to reverse
- Buying a stock because it is a ‘value’ that drops another 50% from your entry
- Trading without a positive expectancy model
- Trading options without understanding how to place stops or use proper position sizing
- Thinking it “Has To Come Back”
- Buying and hoping
- Trading with no plan
- Not having trading rules for your system
- Not following your trading rules
- Averaging down
- Trading without an edge
- Keying error on the trade
- Not placing a stop
- Trying to out-guess the market
- Trading illiquid options
- Fighting the trend in your time frame
- Not fighting the natural impulses of greed and fear
- Using emotions for trading signals
- Using greed for position sizing
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