One of the biggest mistakes traders make is trading too frequently.
You'd think it would be something more technical than that. Maybe misreading charts or not following money management rules. But it's not. It's making too many trades, plain and simple.
Why is this? Well, I have a theory about that...
Most traders hold onto wrong ideas about money because of how they were raised. They think making money must always involve hard work. They have a hard time believing it could be easy.
So they end up feeling like they have to work hard at trading if they want to make any money at it. Which results in trading too frequently.
Trading frequently wouldn't be such a problem except it often means taking a lot of sub-optimal trades.
Traders who are stuck in their thinking and believe they must work hard to make money trading end up settling for bad trades just so they can feel like they're putting in enough effort. Instead of exercising patience and waiting for a really good trade, they enter new positions regularly, no matter what!
This approach to trading is detrimental over the long haul. In the best case, your profits are reduced. And in the worst case, you've got to live with big losses.
Example: Jack R. made 41 trades in Sep 2007. If you do the math, that's more than one trade a day. Now, Jack made a profit, but barely.
When October came, he and his wife packed up their SUV for an extended road trip around the U.S. This turned out to be a good thing.
Naturally, Jack brought his laptop along. He planned to do some trading while he was on the road. But even though he had his laptop, he didn't have a good Internet connection.
So in the month of October, Jack did fewer trades than he had done in September. Only 26 to be exact. The difference? These trades were much more strategic.
As a result, Jack's profits more than doubled in one month! Not to mention, it was nearly half as much "work."
Here's the lesson...
Trading doesn't require you to work hard. Indeed, you might be sacrificing profits if you think of it this way.
So try being a lazy trader.
Wait for the right set-ups before putting your hard-earned money into the market. Make a few excellent trades instead of a bunch of average trades.
Never violate your trading rules just to feel like you're being productive. Be patient, take only the trades that fit your criteria, then sit back and reap the financial rewards. And that is why you should be a lazy trader. - 15224
You'd think it would be something more technical than that. Maybe misreading charts or not following money management rules. But it's not. It's making too many trades, plain and simple.
Why is this? Well, I have a theory about that...
Most traders hold onto wrong ideas about money because of how they were raised. They think making money must always involve hard work. They have a hard time believing it could be easy.
So they end up feeling like they have to work hard at trading if they want to make any money at it. Which results in trading too frequently.
Trading frequently wouldn't be such a problem except it often means taking a lot of sub-optimal trades.
Traders who are stuck in their thinking and believe they must work hard to make money trading end up settling for bad trades just so they can feel like they're putting in enough effort. Instead of exercising patience and waiting for a really good trade, they enter new positions regularly, no matter what!
This approach to trading is detrimental over the long haul. In the best case, your profits are reduced. And in the worst case, you've got to live with big losses.
Example: Jack R. made 41 trades in Sep 2007. If you do the math, that's more than one trade a day. Now, Jack made a profit, but barely.
When October came, he and his wife packed up their SUV for an extended road trip around the U.S. This turned out to be a good thing.
Naturally, Jack brought his laptop along. He planned to do some trading while he was on the road. But even though he had his laptop, he didn't have a good Internet connection.
So in the month of October, Jack did fewer trades than he had done in September. Only 26 to be exact. The difference? These trades were much more strategic.
As a result, Jack's profits more than doubled in one month! Not to mention, it was nearly half as much "work."
Here's the lesson...
Trading doesn't require you to work hard. Indeed, you might be sacrificing profits if you think of it this way.
So try being a lazy trader.
Wait for the right set-ups before putting your hard-earned money into the market. Make a few excellent trades instead of a bunch of average trades.
Never violate your trading rules just to feel like you're being productive. Be patient, take only the trades that fit your criteria, then sit back and reap the financial rewards. And that is why you should be a lazy trader. - 15224
About the Author:
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