Common mistakes in trading
Many mistakes begin before an order is entered. A person sees a recent gain, assumes the pattern will continue and chooses an amount without deciding what loss would be tolerable. The price then moves against them, and the original plan disappears.
Another mistake is ignoring total cost. A small target gain can be overwhelmed by the spread, commission, currency conversion and slippage. Review a complete order preview and consider whether the expected move is large enough to justify the risk and cost.
Check the decision, not only the chart
Write down the reason for the trade, the evidence that would disprove it and the size of the position. Ask who holds the asset and how it can be sold or withdrawn. If the answer is uncertain, a smaller position or no trade may be the more useful decision.
After the order, compare the actual execution with the expected one. Keep a record of what you learned rather than editing the reason after the outcome is known. This gives you a better basis for future decisions than remembering only a winning or losing day.
Three mistakes worth checking for
- Entering a position without a written exit, so the first loss decides the plan for you.
- Adding to a losing position to recover quickly, which raises exposure at the worst moment.
- Using money you may need within months for a market that can fall sharply in a day.
None of these requires special tools to avoid. They require a few minutes of writing before the order and the discipline to read that note again when the price moves.