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Trade Like a Pro: 8 Terrible Trading Habits You Must Avoid

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May 18, 2017 in Economics

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We are all sometimes guilty of bad habits; patterns of behaviour we fall into that then become an unhelpful and even negative influence on our lives. For a trader, these bad habits can make the difference between success and failure, profit and loss. All traders should try to identify any bad habits they’ve succumbed to and do their best to overcome them.

Here are 8 terrible trading habits, all successful traders have to avoid:

1. Not Learning From Your Mistakes

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As a trader, it’s inevitable that you will make some mistakes along the way. Mistakes are an unavoidable part of the business. However, your aim as a trader should be to minimise the effect of those mistakes. You should learn quickly and adapt accordingly so you’re not making the same mistakes over and again.

2. Not Keeping Up to Date

Learning about trading has to be an ongoing process throughout your career as a trader. Markets change and your strategies have to change too. Finding courses like Forex Education by Learn to Trade and staying abreast of industry developments is key to nipping bad habits in the bud and keeping in tune with the trading world.

3. Getting Emotionally Attached to Trades

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Emotional attachment can lead you to make illogical decisions. You should have a comprehensive trading plan in place and be able to calculate risk to reward ratios in order to make intelligent trades. Emotion complicates all of this and can lead you to make poor decisions. Focus on your trading plan and leave emotions at the door if you want to minimise your chances of failure.

4. Letting Anxiety and Self-Doubt Get The Better of You

Particularly when you’re starting out as a trader, anxiety and self-doubt can cripple your decision making process. If you don’t go into a trade positively, you’re likely to question your strategies at every point. It’s better to approach things confidently and affirmatively, and put faith in your trading plan if you’re to beat the negative emotions that will hold you back.

5. Focusing too Much on the Returns

A good trader will always hedge their bets wisely. This means basing decisions on how much you stand to lose rather than how much you stand to win. Working in this way will reduce the risks you take and open you up to lots of smaller, safer wins.

6. Going “All In”

Putting all of your money in one place, or even tying all of your money up in various places, is a bad habit you need to break. Working in this way doesn’t allow you to respond to new trading developments. It’s good to have cash at the ready when a great new opportunity comes along.

7. Trading too Much

Small independent traders are able to act quickly and choose carefully when it comes to trades. This gives them an edge. Trading too much spreads a trader too thin and it’s much better practise to do the appropriate research and choose excellent trading options than make do with a heap of less compelling trades.

8. Becoming Complacent

If you have a trade which seems a sure bet, it’s tempting to forget all about it and let it run and run. However, it’s important to be aware of how government policies and the economy can affect your trades. Keep careful track of all of your trades and the context in which they operate.

Breaking your bad trading habits could see your portfolio improve exponentially. Keep reassessing your practice and make changes where necessary so you trade efficiently, effectively and successfully.

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