9 Mistakes That Could Ruin Your Trading Success

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Daniel Martin

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5 min read Affiliate Disclosure

It can be exhilarating to trade. Some think that trading is a quick path to wealth, but they are mistaken. It’s crucial to understand that, regardless of your level of trading experience, mistakes will always occur.

Investors regularly trade stocks, and other assets, in addition to making longer-term investments. Traders often engage in many transactions and can hold some positions for shorter periods when timing the markets.

Despite using two different sorts of trading approaches, investors and traders commit the same kinds of errors. Both would be wise to keep in mind these typical mistakes and make an effort to avoid them. These errors could ruin their trading or investing success.

Trading Mistakes You Should Avoid

1. Lack of a Trading Plan

Trading without a plan is a catastrophic trading error that traders make. You will benefit from having a documented, well-defined trading strategy for two reasons.

A trading plan will help know precise entry and exit positions, the amount of money to put into the trade, and the maximum loss that can occur.

A trading plan will help reduce your likelihood of losing money while also preventing you from taking unwarranted risks. Stock trading software and AI trading software could be utilized while building a strategy for a trading plan.

2. Day Trading Errors

If you insist on trading actively, consider your options before engaging in day trading. Only the most experienced investors should attempt day trading because it may be a risky game. 

A successful day trader may have an advantage over other traders due to access to specialized tools. These tools are not easily available to typical traders in addition to investment know-how. This can include real-time charting software.

Think carefully before day trading unless you have the necessary skills, a platform, and access to quick order execution. It is advisable to use the best charting software for day trading and stock charting platforms.

3. Not Setting a Risk Tolerance

Keep in mind that every investment return has a risk, therefore it is important to set risk tolerance. Investment rules from your trading plan play a big role here.

Some investors find it difficult to handle the volatility, swings in the market, or more risky investments. Other investors might require a reliable stream of interest income. 

These investors should avoid shares of more risky growth and startup companies. They should instead invest in the blue-chip stocks of well-established companies.

If an investment promises highly appealing profits, be sure to consider the risk involved and the potential loss of capital. 

4. Not Using Stop Loss Orders

A stop order, also known as a stop-loss order, is an order to purchase or sell a stock after its price hits a certain level, or the stop price. A stop order turns into a market order when the stop price is achieved.

Stop-loss orders are available in a variety of forms and can reduce losses brought on by unfavorable changes in a stock or the market as a whole. Once the boundaries you specify are satisfied, these orders will automatically be carried out.

A typical trading error committed is when a trader does not use stop-loss orders. Traders who do not use stop-loss orders tend to lose huge money because a stop loss can help minimize losses, and result in winning trades.

5. Using Too Much Margin

When you “buy on margin”, or engage in margin trading, you borrow money from your brokerage firm and use it to purchase stocks. Simply put, you borrow money, use it to buy stocks, and then repay the loan usually with interest at a later time.

Although trading with a margin might increase your earnings, it can also magnify your losses. It is important to comprehend the margin process. It is also important to understand the circumstances under which your broker may demand that you liquidate any open holdings.

If you utilize margin at all as a trader, do so only after thoroughly understanding all of its implications and risks. It may compel you to liquidate all of your holdings at the bottom when you ought to be on the lookout for a significant turnaround.

6. Over Leveraging and Lack of Money Management

Leverage used excessively might be dangerous. It could be your closest buddy during a winning streak, but when the trend turns, it turns into your worst enemy.

A risky method to think you can generate more money more quickly is to overleveraged. Many traders fall victim to this mental trap and lose all of their money in a short period. Some brokers are giving absurdly high leverage (like 1:2000), which can only lead to oblivion.

So, while choosing those levels and the brokers who represent them, one must use the utmost caution. Because of this, diversification across many brokers is usually the wisest course of action.

Starting small and progressively increasing the percentage is a sensible course of action. This can help ensure effective money management abilities.

You might want to diversify with a trading portfolio and a dividend portfolio to ensure one generates steady income.

7. Letting Losses Accumulate

The capacity to rapidly absorb a little loss and move on to the next trading idea is one of the traits that distinguish great traders. Conversely, unsuccessful traders may feel immobilized if a deal goes against them.

They could choose to stay in a losing position in the anticipation that the trade will eventually succeed rather than moving quickly to stop a loss.

A bad deal may hold up trading cash for a considerable amount of time and cause significant capital depletion and rising losses.

8. Trading Multiple Markets

Traders may tend to jump about from market to market, switching between stocks, commodities futures, and so on.

Trading in several markets at once may be quite distracting. It may impede a new trader from getting the expertise required to succeed in one market.

9. Lack of Record-Keeping

Keeping track of everything is essential for trading success. If you successfully execute a deal, you should keep a record of your efforts and the factors that motivated you to do so.

To prevent repeating the same errors in the future, you should keep track of the reasons why you lost a deal.

Note down information like goals, the entrance, and exit of each trade, the time, levels of support, and resistance. Also the daily opening range, the open and close of the market for the day, as well as notes on your reasoning for making the trade and any lessons you learned.

Your trading records should be saved so that you may review them later and analyze the profit or loss for a certain system.

You should also note draw-downs, and average trade time (to determine trade efficiency). Also, note other crucial criteria performed with trading analysis software


If you have the capital to invest and can avoid these errors, you might be able to see a return on your investments.

Successful traders approach trading as a company. Having a strategy is essential if you want to become consistently successful and survive the trading struggle. It is also advisable to use ai trading software and the best online stock charting to aid stock analysis.

This article discussed the various errors you should pay attention to while trading or investing. These errors could ruin your trading or investing success

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.