TPS E16: THE WORST MISTAKE YOU CAN MAKE IN TRADING
THE WORST MISTAKE YOU CAN MAKE
I’ve lost count on how many traders I’ve seen this happen to. To be honest, it’s probably happened to almost every trader out there at some time or another. Unfortunately, for many it
could be the beginning of the end.
As we all know, to be successful at trading we need to come up with a certain set of rules we will follow each and everyday. These rules are extremely important as they give our trading structure and help us to decide what to do and, just as importantly, what not to do. If you have good solid trading rules and you follow them consistently, then making profits and avoiding large losses should be an attainable goal. But, on the other hand, if you don’t follow your rules, you will receive many more losses than you would otherwise.
And, here’s where the big mistake comes in. I’ve seen it happen to many traders. If you don’t follow your rules and the trade ends up being a winner, you will most likely breathe a sigh of relief when it’s over. But in reality, you shouldn’t be relieved. You may have just made an error that will cause you to fail faster than any other trading mistake you could’ve made.
You see, if this trade (where you didn’t follow your rules) works out, then you will be more likely not to follow your rules the next time. Again, this is the worst mistake you can make. This will cause more damage to your trading account than any other error you can make. And the worst thing is it’s so tempting not to follow your rules just this one time. But you must learn that there can’t be a “just this one time.” You must follow your rules every time, without exception.
Like I said before, I’ve seen this happen to many traders. For example, I remember one trader who usually averaged about 5000-10,000 daily. He was going along fine just trying to make his goal each and everyday, but he got greedy and said there had to be a way he could make more profits. (I’m not sure what was wrong with 5000-10,000 a day.) He decided his rules were too restricting and he was missing many opportunities. So he decided that since he was doing so well, he would relax his rules somewhat so he could get into more trades and hopefully make more profits.
Well, he ignored his rules for a couple of days. Because of that, he ended up taking a lot more risk than he was used to. But he thought it was no big deal because he was now averaging about 20,000 a day for a week. Not following his rules was making him more money for now. But I’m sure you realize what happened.
Within the next month, he lost everything he’d made for the last four months. This happened not because he didn’t follow his rules. No, it happened because he didn’t follow his rules and it worked out. So it gave him a false confidence that he didn’t have to follow his rules.
I’m sure you will go through a time in your trading career (if you haven’t already) where you will be tempted to not follow your rules just this one time. I can’t caution you enough how big of a mistake this can be, especially if it works out and you make a profit. Making money on this “rule-breaking” trade could very well be the most expensive profit you ever make. It then can easily reinforce you to not follow your rules the next time.
It will always be tempting, but avoiding the temptation and resisting making the worst mistake you can make will be much more profitable.
Following your rules consistently is the only way to be a successful trader. If you decide to not follow your rules just this one time, it won’t be long before you are part of the 80-90% of traders who lose money. Don’t let yourself become a statistic. Always follow your rules. Don’t let there be a “just this one time.”
Please share if you have found this useful.!
Related
Are you still struggling with your trading? How to become a successful trader? How to consistently act in your own best interest while trading? Market NSE stocks The Secrets To Emotion Free Trading The Tale of two traders trading Tricks