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Wrong thinking and trading losses.

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Wrong thinking and trading losses.

Postby angelnish » Thu Oct 11, 2012 6:28 am

Excerpt from The disciplined Trader by Mark Douglas
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1. Refusing to define a loss.

2. Not exiting a losing trade, even after you acknowledge the trade’s potential is greatly diminished.

3. Getting locked into a specific opinion or belief about the market or stock direction.

4. Focusing on price and monetary value of a trade instead of the potential for the market to move based on its behavior and structure.

5. Revenge trading to take back from the market what you have lost.

6. Not reversing your position even when you clearly sense a change in the market direction.

7. Planning for a move or feel one building, but then finding yourself immobilized to execute the trade, thus denying yourself the opportunity to profit.

8. Not acting on your instincts or intuition.

9. Establishing a consistent pattern of trading success over a period of time, and then giving your winnings back to the market in one or two trades and
starting the cycle all over again.


*******


How to over come wrong thinking and trading patterns.
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1. Define and enter a stop loss at the time of entry.

2. Define a maximum amount of loss after which no matter what, you will exit the trade.

3. Be flexible and open to change your opinion on the market and stock direction.

4. Have a well defined system of trading and follow it.

5. After a loss or a trading setback, do not impulse trade. Study what went wrong. Also trade small position size or take a break from trading till feeling confident.

6. Accept that stock can change direction at any moment, and that all trades cannot be profitable. A successful trader has to keep losses small, and should not let a profitable trade turn into a loss.

7. To overcome uncertainty and to enter trade with confidence, It gets easier when a long or short entry is made and the stop loss is defined beforehand at the time of entry.

8. Successful trading involves the ability to pull the trigger. The confidence to pull the trigger come from trading with rules.

9. Discipline and risk management is a must to ensure that trading is consistently profitable, while at the same time not risking more when on a profitable run.

10. Finally, it is important to keep a record or a dairy of all the trades executed each day and to review the trigger points for the entry and exit and if they are as per the defined rules. Lessons learnt from wrong execution to be codified into rules.
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Re: Wrong thinking and trading losses.

Postby Haley12 » Fri Oct 12, 2012 10:33 am

Thanks to share good tips to over come on wrong thinking and trading patterns. It will help me to avoid big loss during trading. I follow expert's suggestion as well to avoid loss.
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Re: Wrong thinking and trading losses.

Postby Shawnmichal » Fri Nov 02, 2012 12:43 pm

angelnish, I am agree with you regarding shared points. However most of the new traders do such mistakes.
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Re: Wrong thinking and trading losses.

Postby brokersstarsagent » Tue Nov 27, 2012 8:55 am

angelnish,

You are spot on! It's not just the new traders falling victim to the traps, the old traders are still falling, too.
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Re: Wrong thinking and trading losses.

Postby highway » Fri Nov 30, 2012 8:39 am

very nice
especially about recording your trades and using diary. that's very useful but most of the traders don't do it. however most of the traders quit very fast)
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Re: Wrong thinking and trading losses.

Postby Thomas012 » Thu Jan 10, 2013 9:40 am

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Thanks
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Re: Wrong thinking and trading losses.

Postby Gary Lineker » Wed Jul 15, 2015 11:09 am

Every problem lies in thinking, if we correct that then rest of the stuff will automatically get on track. The usual problem occurs when we have issues with earning money. Most people get impatient when they don’t earn consistently and instead of correcting them problem they make it even harder with silly moves. The best way to deal with problem is by strict money management and I am fortunate to create it with support via OctaFX broker due to their 50% bonus on deposit.
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Re: Wrong thinking and trading losses.

Postby Sininfinity » Thu Jul 16, 2015 6:09 am

Thanks for posting this. Just now I went back to time and saw all my mistakes in front of me. Well i can't change those mistakes but i have improved from them.
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Re: Wrong thinking and trading losses.

Postby Husam » Thu Jul 16, 2015 10:54 am

Yes, that’s really good post. I also see maximum traders close their minus trades before hitting their SL. That’s really, very bad use from new traders. If you set your SL in a logical level then you have to wait until get any result from Forex market. It’s true, sometimes Forex market makes you confuse. But, you have to be cool. As, I follow reliable trading analysis that I get from ECN broker TradingBanks. So, I am very confident about my trade. Because, from last four months I’m consistently using this reliable trading analysis and getting much better result.
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Re: Wrong thinking and trading losses.

Postby Charles Baksh » Fri Jul 24, 2015 9:32 pm

Mindset definitely plays a major role since it’s not possible for anyone to straight away get up and become successful, it is till we don’t have positive thinking we won’t make it far. I use Nova FX broker with their giant option of Risk Free Trade, it is a facility that helps me play it like lottery on very first 3 trades, I have no fear of losses because it’s guaranteed to be recovered up to 500 dollars while profits can stay with us.
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