New traders are constantly making the same mistakes as other new traders. As a self-taught day trader myself, I can confidently say that I have also made these common day trading mistakes when I first got started trading as well. Even though these trading mistakes are a big part of what causes 90% of traders to lose money and ultimately fail, they are actually very easily avoidable. Read through each of these mistakes and make sure to actively focus on them while you’re doing your trading… they may save you from countless losses and help you join the 10% of traders that are able to consistently profit from the market!

Mistake #1: Overtrading and not having a specific trade setup is one thing that almost every single trading beginner does. They will try to buy dips, buy breakouts, buy at VWAP, etc. As a new trader, you should be laser focussed on trading one specific type of setup and improving solely on that. Now, of course, it may take some trial and error to find the one strategy that works the best for you, but once you find it all of that trial and error will be worth it. I recommend using spreadsheets to keep track of the different types of setups and strategies that you’ve been trading and see which ones you trade well and which ones you trade poorly. From there you can begin focussing on the type of trades that you have statistically done better with in the past and avoid the ones that have caused more losses!

In the example spreadsheet below, you can see the strategy "breakout" was profitable 2 out of the 3 times it was used. The strategy "dip buy" was only profitable 1 out of the 3 times it was used. You can use this data to potentially avoid using the "dip buy" entirely and shift your focus to simply trading breakouts.





Mistake #2: Unfortunately because most new traders start with a small account balance, they believe they need to put their full buying power into each trade for it to be worthwhile. When you put your entire account into each trade, you’re setting yourself up for disaster. Think about it… if you’re investing your full account, a 10% loss would not only be a 10% loss on that trade, but it would also be a 10% loss of your entire account. Whereas if you were to use half of your account, a 10% loss on a single trade would only be a 5% loss of your entire account. You should anticipate losses and prepare for them beforehand by minimizing your position size, which then minimizes your risk. “Hope for the best, but prepare for the worst.”

Mistake #3: Practice makes perfect! Don’t get me wrong… reading posts like this and studying with books, youtube videos, online courses, etc are very helpful for new traders, but the next step is to practice, practice, and practice some more. One of the best ways to “practice” in the market, whether you’re day trading, swing trading, or long-term investing is to simply watch the market. Watch the live data, practice reading the real-time price action, learn to spot patterns, etc. For many people this can be difficult to do because trading is something they do on the side of another job and they may not have time to watch the market during market hours. If you have this problem too, download a screen recording software like OBS or Quicktime (both are free) to record your screen while you’re off at work. Later, you can re-watch the recordings and “practice” as if it was realtime data.

Mistake #4: Go on any social media platform today and you will see someone talking about their “stock alerts” or “trade signals.” Do not buy into their hype! Following alerts may get you a few profits here and there, but you will never succeed in long run by blindly following someone else’s trades. Unfortunately, many new traders believe these alerts will be an easy way to make extra money, but really the only one making consistent money is the person that is selling the alerts. You’re much better off learning to trade yourself than relying on the alerts of someone that claims to know how to trade.

Mistake #5: Trying to learn how to trade on your own can be very timely and very costly. Take it from me, since this is exactly what I did when I started trading. I don’t recommend following alerts, like I mentioned in Mistake #4, but following the advice, techniques, and strategies of successful traders and investors can be a great way to learn how to trade and to even find your own strategies! There is plenty of free advice online that can help you get started, or you can even pay for educational programs. Usually the cost of these programs is much less than you would lose by trying to learn how to trade on your own. I like to think of it as tuition into the market.

Now, of course, I’m not saying you’re guaranteed to succeed by avoiding these 5 mistakes, but you’ll certainly be better off by doing so. Follow these along with other common trading rules like cutting your losses quickly and avoiding greed and you’ll be setting yourself up for success much more than many other new traders. Good luck!

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