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The post 3 Common Trading Mistakes Even Profitable Traders Make appeared first on Bulls on Wall Street.

In Trading in the Zone, Mark Douglas talks about how 95% of your trading mistakes are the result of your existing beliefs about 4 simple concepts:

1. Beliefs About Being Wrong
2. Beliefs About Losing Money
3. Beliefs About Missing Out
4. Beliefs About Leaving Money on the Table

We have talked a lot about finding consistency in trading in articles earlier this week. Understanding these 4 common reasons will drastically improve your trading consistency, and help you understand and limit the trading mistakes you keep making. We will talk about winning and losing belief systems of each concept so you will know which side of the spectrum you fall on (we will talk about these more in tonight’s free workshop on building consistency).

1.Beliefs About Being Wrong

Do you perceive being wrong as a negative event? If so, profitable trading will be very difficult. Cause you will be wrong a lot, usually on a weekly basis, even when you become profitable. Being the wrong part of the time does not mean you cannot make money trading. 

Losing Belief Systems

1. Being wrong is a negative event
2. I want to avoid being wrong
3. The market is wrong, not my position

Winning Belief Systems

1. Being wrong is a learning experience and helps me grow
2. I want to trade profitably, not be right all the time
3. The market’s opinion is the one that matters most

2. Beliefs About Losing Money

When deciding to become a trader, you are entering a world where your mistakes and being wrong is punished by losing money. Like with being wrong, losing money is a regular occurrence for a trader:

Losing Belief Systems

1. Losing money is a negative event
2. I want to avoid losing money at all costs
3. I want to make money without risking anything

Winning Belief Systems

1. Losing money is the price you pay to see if your trade thesis is correct
2. Losing money on any trade is possible
3. You have to risk it to get the biscuit

3.Beliefs About Missing Out

There are thousands of opportunities in the markets every day. You will not capitalize on most of them. Missing opportunities to make money is a regular occurrence in trading. If you do not have the right beliefs about missing out, you will have a lot of trouble finding consistency.

Losing Belief Systems

1. I need to be a part of that stock’s run
2. I need to find a winner because I missed a big mover earlier
3. I need to get in now because I don’t want to miss out on a big move

Winning Beliefs Systems

1. I will wait for a pullback to enter that stock
2. I will wait for an entry signal, regardless of what others stocks have done today
3. I will never be able to catch every move in the market

4.Beliefs About Leaving Money on the Table

No one knows how far a stock can rally, or how far a stock can fall. Give up trying to catch tops and bottoms. Focus on capturing the meat of the move. You have to learn how to cope with leaving money on the table in order to develop consistency in your results.

Losing Belief Systems

1. I am a bad trader because I sold too early
2. I’m not selling here I want a bigger winner
3. I’m not taking profits here because I left money on the table earlier, and don’t want to do it again

Winning Belief Systems

1. My system gave me a sell signal, so I took my profits. Leaving money on the table happens.
2. I will take what the market gives me and not get greedy
3. Each trade is independent of one another, it doesn’t matter what that other stock did earlier today.

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The post The 4 Primary Causes of All Your Trading Mistakes appeared first on Bulls on Wall Street.

Every single trader makes mistakes. Usually on a daily basis. And often it’s the same mistake that you’ve made 100’s of times before.

Why? Because no matter how experienced or rich you are, we are all human. This means we all have the same weaknesses, and are subject to the same emotions that are harmful to trading success.

The difference between winning and losing traders is how often you make these mistakes, and how much money these mistakes cost you. Here are 3 trading mistakes that every trader will make, and what you can do to avoid them:    

Sizing Incorrectly

Sizing your positions correctly is one of the most important components of profitable trading. A common issue most traders have is that they put on too much size at the wrong time. They want a big winner, so they buy 1000 shares of a volatile stock when they have a $2000 account.

This causes them to trade emotionally and make incorrect trading decisions. They panic when their position goes against them because they cannot afford to lose the money they are risking. They take profits too soon because they are focusing on their PNL instead on where the market is heading. Trading smaller size will actually make you more money because you trade less emotionally.

In this PCG trade I took earlier this week, I shorted too many shares, and lost money because it made me emotional. Although I don’t have the small account issue, I’m still capable of making a gamblers mistake. If I had just scaled in and sized down, I would have not lost money and participated in great setup. Here’s a video recap of my trade I took in PCG:

Entering At the Wrong Time

The entry is everything in trading. The most common reason why traders will get a poor entry is because of FOMO. They were scared of missing a big move so they chased, and bought too high or shorted too low. Always remember that there will always be opportunities in the market every day. Do not get emotional about missing a big move. There will always be another big mover.

In my PCG trade, instead of waiting for the stock to pullback to the 9EMA, I shorted way too low and got terrible risk vs reward on my first trade on it. Stocks with SSR will usually squeeze before they head lower, and I got caught in the early squeeze. I was worried about missing the move down instead of getting a low risk entry near the 9 EMA. If I had waited for the right entry, I could’ve had a much bigger winner.

Taking Profits Too Soon

You will rarely be able to capture the whole move. Leaving money on the table is inevitable in trading. But you should strive to catch the majority of the stocks’ trend. Just because you made money on a trade does not mean you traded it correctly. Your goal is to try to capture at least twice of what you risked on the trade when you take profits.

Taking profits too soon has costly consequences for your trading. If your risk vs reward is poor, you will need to have a high win rate to remain profitable. 1 of your winning trades should be equal to what you lose on 3 trades. If you have trouble letting your winners ride, try to think of where the person with the opposite bias would enter their trade. If you are long, think of where someone would start in short. Be patient with your winning trades, and impatient with your losers.

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The post Simple Trading Mistakes That Can Cost You Big Money appeared first on Bulls on Wall Street.