According to Ruth Barrons Roosevelt, author of Overcoming 7 Deadly Sins of Trading, there are certain scenes that we must overcome in order to be successful as traders.
Today we are going to look at these trading sins so that you may develop a better understanding of how they may play a role in your own decision-making, and ultimately improve your future performance in the markets.
You are never going to have a perfect trade or a perfect system, and it is unrealistic to expect every single trade to yield a profit.
Instead of trying to be a perfect trader you might instead focus on simply generating a modest and consistent profit over the long haul.
In order to adopt a sound investment strategy and actually stick to it you need to overcome your fear and have faith in your plan.
Just because your strategy is not successful every single time does not mean that it is useless.
Remember that no matter how successful or unsuccessful you are as a trader, this does not fundamentally affect your value as a human being.
Try not to let pride or ego get in the way of your decision-making, and if you have committed to entry and exit points in your trades then you need good reason to change them.
Speaking of entry and exit points, impatience is another “sin” that many traders fall prey to in this context.
You should always let your profits (and sometimes your losses) run their course, letting the market do its thing and your strategy work for you.
If you have missed a great point at which to enter the market then you shouldn’t let greed tempt you into jumping into a less lucrative position.
By the same token you should always remain aware of the point at which it is time to close a position. Hanging on to a trade that has lost momentum just in the hope of grabbing a few extra pips may not make for long-term successful trading.
Just as pride can be the downfall of many an aspiring investor, anger can be especially damaging, particularly if it is aimed at yourself.
You are always going to make mistakes from time to time so don’t be so hard on yourself and instead use these missteps as a chance to learn something so that you won’t make the same mistakes next time.
Another important aspect of having a solid strategy in place is that it will prevent you from making reckless trades.
Opening positions that are too big or overrunning your initial stop losses would be classed as reckless trading, and this is something knowledgeable traders steer well clear of.
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