This is normal for a newbie trader.
You've just gone through a winning streak where you've banked three winners in a row.
At this stage you start to feel like you own the market where you think you've cracked the code to successful trading.
You then decide to bet bigger than you ever have.
Once you enter this frame of mind, you'll see that you can destroy your portfolio very quickly.
Today I'm going to discuss three bad habits that you'll need to watch out for…
To participate in this 15 year winning strategy...
• You do NOT have to be a financial wizard.
• You do NOT have to have a large amount of money, and
• You do NOT have to have any trading experience.
You should also know that this won’t require much of your time either… About 20 minutes a week is all you need.
Bad habit #1: Go big or go home
When success goes to your head, we often get greedy.
This is when you forget the good money management principles that got you winning trades in the first place.
Every successful trader consistently applies these questions to every trade
1. What is the maximum amount you’re willing to risk per trade?
2. Where will you place your stop loss should the trade turn against you
3. If the trade goes in your direction, what will you implement to adjust your trading level, so you can maximise your winner
Bad habit #2: Take as many trades as possible
I’m talking about over trading…
This is when, during a winning streak, traders decide to open 5, 10, 20 or even 30 trades at once.
The problem with this is, if each trade hits your stop loss, then the 2% you risked per trade can quickly turn into a 20% loss on 10 trades.
Rule of thumb of most successful traders - Never have more than three trades open at any one time.
Bad habit #3: Falling in love with your trade
This is a big one.
We all want to be right 100% of the time and win with everything we do.
But with trading you need to learn to lose to win.
When you fall in love with a trade decision, you will find every reason to keep supporting that decision – such as finding trading supports and psychological levels and even add more money to a losing position because you’re so convinced it will turn around.
So how do you overcome this?
First, you should never see trades as a long-term investment. Make sure you have your entry and exit plan BEFORE you even take on a trade.
Second, let the market decide which route it wants to go.
If it’s a winner, you can add your small profit onto your portfolio for the next trade. If it’s a loser, learn to shrug it off and start with money management principles to select your next trade.
Break these habits and you’ll be well on your way to trading success.
“Wisdom yields Wealth”
Analyst, Red Hot Storm Trader