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 or unconsciously.

If you are trading in order to make a profit, it is important that you approach your trading in a serious, business-like manner. People that trade for entertainment, or to impress their friends, will be lucky to break even, let alone make a profit.

Be careful not to make the mistake of viewing yourself as a serious trader if, in fact, you are just seeking entertainment.

Another important mistake to avoid is the temptation to over-trade. This is a greater risk for traders that are not following a predetermined strategy.

Sometimes, choosing to sit on the sidelines until a clear trend emerges is in itself a valid strategy.

Traders should also avoid the mistake of consistently trading fully leveraged positions just because they have funds available. Each trade should be considered on its own merits and within predetermined risk parameters.

To avoid the possibility of being exposed to such a dire (if unlikely) outcome, it is important that you do not trade with money that you cannot afford to lose. You can also lose more than your account balance.

Sometimes choosing to sit on the sidelines until a clear trend emerges is in itself a valid strategy.


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