If you’re new to trading, it’s totally normal to feel on top of the world after a winning streak. But watch out for a few trading habits that could mess up your portfolio. Let’s talk about three of them.
Bad trading habits #1: Don’t Bet Big Out of Excitement
When you’ve been winning, it’s easy to get carried away and start making bigger bets than usual. But going big without thinking can quickly wreck your portfolio. Remember these simple questions for every trade: How much are you willing to risk? Where will you set your stop loss? If things go well, what’s your plan to maximize your gains?
Bad trading habits #2: Avoid Overtrading
Winning streaks might make you want to open a bunch of trades all at once. But be careful – if they all go south, you could end up with a big loss. A good rule is to never have more than seven trades open at the same time, especially if you’re just starting out.
Bad trading habits #3: Don’t Fall in Love with a Trade
We all want to be right all the time, but in trading, it’s important to accept losses. If you become too attached to a trade, you might ignore warning signs and keep pouring money into a losing position. Instead, have a clear plan before you start a trade, and let the market guide your decisions. If it’s a winner, great! If it’s a loser, learn from it and move on to the next opportunity.
Break these bad habits, and you’ll be on your way to successful trading.