Using the Wrong Order Type

Using the Wrong Order Type

Trading with real money should be viewed as a serious business. As such, you should take the time to ensure that you thoroughly understand the most basic tools of the business. Many CFD traders have missed opportunities or closed out of trades at the wrong time simply by placing the wrong type of order. At the very least, you should understand the following order types.

Market order

Used to execute a trade at the current price.

Stop order

To exit a trade, place a stop order at a level that is worse than prices currently available. On a long position, the stop-loss order to sell would be placed below current prices. Conversely, on a short position, the stop-loss order to buy would be placed at a level above current prices.

Limit order

To exit a trade, limit orders are placed at a level that is better than the current price. When seeking to lock-in profits on an open long position, a limit order to sell would be placed at a level above current prices. If seeking to lock-in profits on a short position, a limit order to buy would be placed at a level below current prices.

Source link   Presented by FP Markets

Psychological and Emotional Mistakes

Making money requires a trader to place trades that are ultimately 'correct' and deliver a profit. Because of this, many traders develop the mindset...

Trading for the Wrong Reasons

Most people undertake trading with the goal of making a profit. However, there are some people that participate for entertainment, either consciously...

Responsibility Taking for Trades

While most traders keep a keen eye on their open positions, there are those that make the mistake of not doing so. By frequently checking on your...

Not Learning How to Use Trading Platform

It is hard to imagine that a builder would get far without learning how to use his tools, or that a surgeon would have happy patients without learning how...

Using an Inappropriate Strategy

A common mistake among traders involves using an inappropriate strategy, or worse still, having no strategy at all. Using some type of strategy...

Instrument Understanding

Being over-the-counter products, there are a great many differences in the specifications of contracts available as CFDs. If you are trading these products...

Poor trade management

While traders frequently commit an inordinate amount of time to selecting, planning and executing new positions, they often make the mistake of exiting..

Not Understanding Impact on P&L

Closely related to the misuse of leverage is the mistake of not understanding how a particular trade will impact your profit and loss. Because of the...

CFD mistakes: Misuse of leverage

Even the most seasoned professionals have been known to accidentally buy instead of sell or trade the wrong quantity or even the wrong security...