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The most frustrating part of trading is losing money when you know you didn’t have to. It’s not the normal statistical loss that hurts, it’s the ones you could have totally prevented; entirely your fault. These are the losses that are the result of trading mistakes. You need to learn how to prevent them, because the key to long-term trading success is preserving your risk capital so that you can take advantage of the high-probability trade setups when they arise.

Today’s lesson is going to discuss some common mistakes that traders make, which inevitably lead to losing money, and provide solutions to those mistakes. I know what the solutions are because I have made all of these mistakes on my own trading journey. I know what you’re going through, how it feels and how to help you dig out of the rut. So, let’s get this show on the road…

  • Mistake: Thinking too much

One of the most common mistakes I see traders making, is simply thinking too much. People tend to make trading much harder than it is. I get emails nearly every day from traders who clearly are over-thinking the market and making things more complicated than they need to be.

  • Solution: Stop thinking so much

Analysis-paralysis is something I discuss in-depth in an article I wrote titled “A Cure for Trader’s Analysis-Paralysis”. Reading that article will give you some good insight into how you can stop thinking so much and start trading instead. Obviously, in the early stages of learning how to trade, you will need to spend more time studying a course and studying the charts, so that you can develop your trading strategy and trading plan. But, once a certain level of proficiency has been achieved, it’s time to take off the ‘training wheel’s, build a trading plan, and start trading. Just remember, stick to your method, keep it simple, and block out all other external influences. Also, stick with your trades, don’t second-guess yourself; if you’re following your trading plan, you need to see each trade through without micro-managing or doubting them.

  • Mistake:  Trading too much

Over-trading is sort of the opposite of over-thinking, in a way. Over-thinking usually leads to not trading much, if it all, because you think yourself right out of perfectly good trades. Whereas, over-trading means you probably aren’t thinking enough. You haven’t put the time to learn how to trade properly, build a proper trading plan, or perhaps you are just so greedy that you don’t have the patience to wait for your trading edge to appear in the market.

Whatever the cause, trading too much can be a very quick route to blowing out your trading account.

Here’s an actual email I got from a trader asking me a question, but also indirectly telling me he is trading WAY too much:

“Dear Nial, I want to know if I should exit a USDJPY trade I am currently in, as I am also in 5 other trades of pairs I think may be correlated. Thanks, Dan”

This guy is clearly over-trading. I am typically only ever in one trade at a time, because there really is no point in being in more than that. Holding multiple positions at once only makes sense from a long-term “buy and hold” investing standpoint. Or, perhaps if you are trading very different instruments, like say a Forex pair and a commodity future. But, typically, beginning traders being in multiple markets at once, means they are over-trading and probably over-leveraging their accounts.

  • Solution: Understand that you don’t need to trade a lot to make money

The best way to understand the solution to the problem of over-trading, is to read an article I wrote on the matter. The title is High-Frequency vs. Low-Frequency trading, you should check out to learn more.

  • Mistake: Risking too much

Risking more than you can mentally afford to lose at any one time, is a death-sentence in trading. Now, the key in that last sentence was “more than you can mentally afford to lose”, what do I mean by that? I mean, you need to really stop and look at your finances and determine how much money can you realistically afford to lose on any given trade. This means being honest with yourself, not ignoring things like credit card debt or student loan debt, etc. The more you risk per trade, the more emotional you will get once that trade is live.

  • Solution: Know how much you are OK with losing

As a beginning trader, especially, it’s important you start with very small amounts of real money so that you can ‘ease’ yourself into the emotional battlefield that is trading. You need to know what your ‘uncle’ point is; the point at which you can’t mentally handle any larger of a draw down, and that is the dollar amount you need to set as your 1R risk amount.

Read more about risk management here.

  • Mistake: Worrying too much about money (what to risk, profits) before knowing how to trade

Here is a recent email I got from a trader who clearly is ‘putting the cart before the horse’ in regards to his trading:

“Hi Nial, I am a new trader, I want to know how much I should risk per trade, I have $3,000 to risk. Also, I hope to make money in the market so I can get your course soon. Cheers, Stan”

OK, most of you have a good idea of what is wrong with the above statements in Stan’s quote. But for those of you who don’t, let’s discuss. First off, you should not be worried about “how much to risk per trade” if you’re a “new trader”. It simply makes no sense. You must first learn how to trade from a reputable source, and then you will need to spend some time demo trading and ironing out a trading plan, before you even think about risking real money in the market.

Traders who start risking money without having learned how to trade, inevitably lose all that money. Also, someone saying they are going to “make money trading to buy your course”, is like trying to fly a Boeing 747 before having gone to flight school; if you try it, you’re probably going to crash, and if you try trading before getting a trading education, your trading account is going to crash.

  • Solution: Forget about the money for now, get the training

Instead of worrying about money and profits, worry about learning to trade. Worry about mastering the hell out of your trading strategy and becoming the absolute best trader you can be. By doing so, when you’re ready to trade real money, you will be light-years ahead of someone who doesn’t put in that early work, often called “paying your dues”.

In regards to thinking you can make money trading to buy a trading education (that teaches you how to trade, lol), well hopefully you can see how silly that sounds. There is nothing in life that you can succeed at before you have had any serious training with.

  • Mistake: Chasing the market after missing a signal

Often, traders will try chasing a market after missing a trade they were eyeing. What I mean is, they jump into the market after the trade has already taken off without them on-board. They do this because they feel regretful for not taking that trade and mad they didn’t listen to themselves. The problem here, is that doing this will get you in at a very bad price, requiring a wider stop loss and smaller position size, it’s simply less-likely the trade will work out for you if you chase the market like this.

  • Solution: Wait for a second-chance entry

The solution is to simply not chase the market if you do miss a signal. You need to wait patiently for what I call a second-chance entry opportunity, because usually one will present itself. For more information on how to do this, check out an article I recently wrote on how to get on-board a trade you initially missed.

  • Mistake: Not trusting yourself

Not trusting yourself or not believing in your trading abilities are big problems for many traders. Trading is something that, as mentioned earlier, is easy to over-complicate. People tend to think trading is ‘very hard’ or something that involves a lot of difficult math. But these beliefs simply are self-defeating ideas that contribute to low trading confidence in one’s self.

It is a big mistake to not trust in your trading strategy and your trading plan, because these things were learned and developed (I hope) when you were not a trade and thus at your most objective and level-headed. So, the emotional you (when you’re in a trade) must rely on the plans and ideas you formulated when you were not emotional (trading plan, etc.), and you have to trust in that and not waver in your self-confidence.

  • Solution: Learn to trust your gut

You simply need to learn to trust your gut in trading. Everything you’ve learned and all your trading experience contribute to your ‘gut feel’ in the market, and so you need to listen to that and learn to rely on it.

  • Mistake: Paying too much attention to news and other external data

If you’ve followed me for a while now, you know I am not a fan of news-based trading. In fact, I think it’s downright counter-productive for a trader to pay too much attention to news events and how they may or may not impact a market. You can find whatever you want on the internet, and for a trader that can be very dangerous. If you want to disprove your trade idea, you will find evidence supporting that, if you want to prove it, you’ll find that evidence online too. At the end of the day, successful traders block out external variables and focus only on their trading edge.

  • Solution: Ignore the news

I have a good article on Why You Should Ignore the News, and I obviously think you should read it so that you can learn why I don’t pay attention to news variables in regards to my trading, and why I think it can be dangerous.

At the end of the day, if you have a trading method, let’s say it’s price action, you must stick to that method, because that is your trading edge. As the late great Mark Douglas would say, you need a definable trading edge so that you can execute it over a large enough sample size of trades, to see that edge work in your favor. If your trading edge is just basically a random hodge-podge of indicators, news and feelings, you are basically just gambling.

  • Mistake: Not letting trades come to you

People tend to ‘force’ trades that aren’t there. They want to make money so bad, that they manifest ‘opportunities’ in the market where none exist. This is basically the same as over-trading, but the point here is that the best trades will tend to stand out like ‘sore thumbs’ on the charts. You should not have to look to hard, if you know what you’re looking for. If you find you must email people and ask other traders “is this a good trade”, it probably is not a good trade, at least not one worth risking money on.

  • Solution: Stop looking so hard for trades

As I have written in a recent article, The Best Trades Will Find You, if you stop looking for them. I have found this to be very true over my years trading the markets. The best trades tend to just be super-obvious and almost jump off the chart at you. The question then becomes, do you have the knowledge and skill to recognize these trades and, do you have the confidence to back yourself properly when you do recognize them?

  • Mistake: Feeling a sense of urgency to trade

Many traders become addicted to being in the market. They are addicted to the adrenaline and dopamine rush that they get when they enter a trade. Thus, when they are not in a trade, they tend to ‘crash’ and feel terrible, the only thing that gets them feeling ‘normal’ again, is another ‘injection’ of trading into their veins. Perhaps you are not quite THAT ^ addicted to trading, but you still feel some urgency to be in the market. You feel like if you aren’t in the market then you won’t make money, or you feel the more trades you make the more chances you have to make money. Well, I am here to tell you that all of these feelings, thoughts and actions are wrong and will only lead to you failing in the long-run.

  • Solution: Realize that the market is a never-ending opportunity stream

The market is always going to be there, the big move today will be over and another big move is just around the corner in another market or the same market. The ‘casino; of Wall Street never ends and it has been this way since capitalism was born. YOU need to survive another day, that means trading less frequently and capital preservation.

  • Mistake: Not having knowledge / education before trading live

As I mentioned earlier, I get many emails from traders telling me they are planning to “make some money trading so they can buy my course”. I have to chuckle to myself when I read these kinds of emails. Whether you learn from me or some other source, you must, must, must get educated before you try to trade the markets with real money. There is just too much knowledge you will miss out on by not learning from a trader more experience than you, too much trial and error to figure it all out yourself, and way too much to be lost.

No one wants to lose money in the market, the best way to avoid losing money unnecessarily, is by obtaining a solid trading education before you start trading live.

  • Solution: Invest in yourself; invest in a trading education

In my humble opinion, you need to learn price action trading. You need to learn how to read a price chart, from left to right. This is not just an important skill for trading, but for any financial endeavor where you may have to read a price chart and make sense of it. Such as, your retirement account, work-related investing or really anything; all markets have price charts associated with them and if you don’t know how to read them, you are doing yourself a disservice. But, more importantly, for our purposes, if you are planning to be a trader you absolutely need to know how to read and trade price action and you absolutely need to obtain that ability before you try risking your hard-earned money in the markets.
To learn how to read and trade based on price action, start here.

PLEASE LEAVE A COMMENT BELOW – I WOULD LIKE TO HEAR YOUR FEEDBACK :)

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About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 15,000+ students since 2008.
Checkout Nial’s Professional Forex Course here.

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32 Comments

  1. Praise says:

    U are the best fx mentor in the whole world. You deserved to crown the king of fx traders. (Igwe traders)you are the reason why am still breathing in this forex battle field. May God almighty bless u.

  2. Monareng says:

    Hi Mr Fuller…thanks for taking time to give us these fruitful articles.I’ve recently started applying price action strategy on daily chart trades and I find it extremely helpful. Thanx again for improving my trading “game plan”. Best regards.

  3. Genc says:

    I read your articles for a long time Nial, and somehow i think i know you , reading your articles makes me think you are great person.

    Cheers mate.

  4. alin says:

    Really interested information’s…thank a lot nial

  5. Sthembiso says:

    Important stuff coming from a GREAT MENTOR, thanks Nial for these POWERFUL, FRUITFUL articles.

  6. Atul Kapatkar says:

    I have also made these mistakes. Since I started reading and following ‘Price Action Strategies’, my trading is improving. Thanks Nial.

  7. Ruben says:

    After 10 years I carry on doing a lot of mistakes while trading, although I am better at them ;)

    Thanks for the post

    Regards

  8. Rosalee De Los Santos says:

    Thank you very much for this article, Nial! So, It is advised to only have one trade at a time! Hahaha! I have about ten now but I am just demo-trading. I’m interested to see what happens to my many trades everyday while I am still on the learning curve. Newbie, yes, I am. Your advises have changed me in many ways, Nial! So, thank you once again and I am following you closely, mentor! – Rosalee T.

  9. Trader says:

    Thanks Nial.
    Did some of the mistakes mentioned. Thanks for the insight.

  10. Zahari says:

    Tq Nial. May I know what is the right time frame chart
    to analize before enter trades

    1. Nial Fuller says:

      Daily

  11. Gbenga says:

    very useful articles

  12. Thabo says:

    Good Evening.
    HI Nial your article is spot for the newbies like me.
    I commited all those mistakes you are highlighting and now focus on 1Day trading which minimized my losses and frequent trading.
    You are indeed a qualified mentor who is not selfish to capacitate /equip people about trading techniques.

    God Bless you and give you more strength to share your wealth of experience with the potential traders.

  13. festus says:

    Thank you Nial. You are just on point. Guiding our footsteps along trade journey

  14. Habialu wariluko says:

    Thank you very much Nail. This article is really putting some of us back on the right track. Your article is better than genuine to train everyone to be a serious trader. Thanks again for your efforts you put together in this article which I learned easily free.

  15. Thambirajah Yogarajah says:

    Dear Nial,
    Wonderful article. Everything you said is true. Nothing can be a substitue for eduation for any profession and no exception when it comes to trading too. It is also important after learning the skill how to stay in the “Game” with good prctice and money management skills.
    Wonderfully put under “Mistake: Feeling a sense of urgency to trade”. Absolutely true.

    It is very interesting to read your artcles. Keep them posted please.
    Thank you.

  16. Said Alwashahi says:

    Thank you for these great advises.
    I’ll work hard to stick to them.
    regards

  17. Stephen Clarke says:

    This is the wisest stuff you can give traders, old and new alike. Self-mastery is a hundred times more valuable than technical mastery, and you’ve nailed (Nialed?) the whole range in this article. Only new to LTTTM but already feeling in very safe hands.

  18. oskar_n says:

    again great article ;-)

  19. rehan li says:

    My God! thanks a lot for these wake up call. its really been a big pin point at me.all those words really helps to motivate me and makes me realise that over thinking and insecure of your own trades is not a good things to do.Thank you again Nial

  20. Gary Clarke says:

    Hey great article Nial’s especially for my eager Cousin Jason who is very excited about the Forex and is definitely with my advice buying your course before he starts trading….Im excited hes on board with me in the Forex business.

    Gary Clarke
    Vancouver, BC Canada

  21. Nomcebo says:

    I needed this, thanks Nial.
    I’m a new trader and often suffer from over-thinking.
    I’ll keep these pointers in mind.

  22. Kelvin says:

    This is definitely good piece of info for any trader either pro or beginner. I definitely struggle from some that you mentioned but am getting the hang of it now at least. True what you said, the market will still be there so no hurry the price will continue rising and falling. This is resourceful Nial, Thanks.

  23. Esteban Santana says:

    Thank you Nial. I find these are always good points to review and be reminded about. Repitition is key to learning these points well.

  24. Brett Reynolds says:

    Great article. I have not commented or contacted you for a good while now Nial but you seem to write articles just at the right time to constantly remind me of where i had been going wrong for so long! I can tell ‘All Newbie’ traders…that even after getting all the Forex Education you can from every source you can get it’…if you Do Not master your ‘Trading Plan’ your ‘Trading Demons’ will eventually ‘Take Over’!

  25. Tadas says:

    Ohh… i still fighting with some of these mistakes.

  26. Marjan says:

    God bless you dear mate,you are really generous,kind,humble,genuine and a lot of other good words that really deserve to attribute your great soul.A sincere coach that exactly spotlight our A chilles heel.

  27. Ivane Zurabishvili says:

    so, necessary article, each mistake attracts loss of hard-earned money…
    thanks Nial for article

  28. Felly says:

    Thank you very much Nial. As always, a very helpful piece of analysis :)

  29. KRISTOFA OKENTA says:

    Though I am not “making” all the mistakes listed here, but I am not excusing myself
    because I have “made” most of these mistakes.
    Thank you dear Nial for your concern that I should be perfect.

  30. Halldor Jonsson says:

    Dear Nial

    I am reading your thoughts now for a long time and all the time those become more true. Nowadays I think more about not loosing than making money. If I see a trade coming into green I think more of moving the stop loss modestly to the green line and then just over to prevent a loss. And adding to a trending position rather than hunting for more. If my account history has less minus posts than pluses I am happy. Of course I am glad when the going is better than I expected but the main thing in my mind is preserving the capital and not loosing, And when so, loose as little as you can tolerate. I keep my lots down as I know I have only a few years experience but I am slowly advancing those as my confidence is growing as I read your posts. I have stopped believing everything that is based on lagging indicators and news, only gut feeling and intuition in the price action is the thing. As the man said.

  31. Bart says:

    Very good article! I think you have a camera behind many traders and you just see what they are doing wrong and then you write articles based on that :) 100% accuracy in each paragraph.

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