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  • Beginner
  • Intermediate
  • Advanced
  • Completion
  1. Beginner
    Early Stages for Beginners
    8 Topics
  2. Forex Terminology
    11 Topics
  3. Margin & Leverage
    2 Topics
  4. Intermediate
    Identifying Scams
    2 Topics
  5. Brokers for Beginners
    5 Topics
  6. Technical Analysis
    13 Topics
  7. Advanced
    Using Indicators
    6 Topics
  8. Technical Analysis (Part 2)
    8 Topics
  9. Market Structure
    5 Topics
  10. Fundamental Analysis
    9 Topics
  11. Completion
    Risk Management for Beginners
    8 Topics
  12. Psychology for Beginners
    7 Topics
  13. Personal Psychology Questions
    2 Topics

Habits Bad Traders Have

1. Not Creating and Following your trading plan.

A trading plan is a set of rules YOU set for yourself that YOU will always try to follow. An example would be: “I will not risk more than 2% per trade. I will only trade the London Session and my profit goal is $500 for the week. I will only trade EUR/USD.”

Following your trading plan is essential! If you do not have a trading plan, don’t worry. It comes with time! Trading in a demo account is the best way to practice and figure out a strategy that works for you because everyone is different.

2. Revenge Trading

Revenge trading ranks as one of the top reasons for blowing an account. We all lose trades and that’s okay because you use proper risk management, you can always bounce back from a loss. Although this is stated as one of the habits bad traders have, it’s understandable because it’s easier said than done. Immediately after taking a loss, revenge traders hop back into a trade because they don’t want to lose money. They think it’s a game and they’re going to ‘get the market back.” Then go right into the next sentence which is frustration and anxiety. Whatever patience went into the prior trades is long gone. Frustration and anxiety are leading them to take low-quality trades without awaiting confirmation. They may use a higher lot size and remove their stop loss. Their only goal is to make back what they initially lost. The reason that this is a bad habit is because what happens if you lose the 2nd trade? And 3rd? And 4th? You now have lost several trades trying to chase the first loss, instead of looking for actual quality set-ups, and understanding losing is a part of the job. That’s why “risk management” is in place.

3. Not Setting a Stop Loss / Adjusting it

Not setting a stop-loss can be detrimental to your trading account. One wrong trade without a stop loss and your account can be gone! Trust me, it has been done by so many traders so make sure you protect your capital at all times.

Another side of the coin is moving your stop-loss. It develops from fear of taking a loss. You place a trade and it hits your stop-loss and then reverses back in the direction of your bias. You may think: “Man if only I moved it down another 10 pips, I would’ve won that trade”.
So the next time you trade and you see that price is coming towards your stop loss, what happens? You start saying to yourself: “Oh I remember what happened the last time, let me increase my stop loss by 10 pips”. Welp, price drops another 10 pips and then hits your new stop-loss.

Instead of taking a loss of, let’s say: 30 pips, you take a loss of 40. Remember when you do that, your risk to reward ratio lowers as well. Keep in mind that you set your stop-loss at a specific price for a reason. Traders who trade without a stop loss or constantly adjust their stop loss during a trade develop bad habits.

4. Over-Trading

If you need to be in a trade 24/5, you should definitely try to find another hobby. Profitable traders aren’t profitable because they take the most trades. They are profitable because they are patient and take good quality trades. There are times when people are in so many trades that they can’t place another one. That next trade may have given them the best opportunity, but they can’t take it because their broker won’t allow them. You have some traders who want to get into a trade the very second the market opens. Trading TOO much can be detrimental to your trading career because you need to account for losses. Don’t just think you can win 30 trades in a row and it’ll be okay. The more you trade the more losses you may incur, which again, boils down to risk management!

5. FOMO

If you need to be in a trade 24/5, you should definitely try to find another hobby. Profitable traders aren’t profitable because they take the most trades. They are profitable because they are patient and take good quality trades. There are times when people are in so many trades that they can’t place another one. That next trade may have given them the best opportunity, but they can’t take it because their broker won’t allow them. You have some traders who want to get into a trade the very second the market opens. Trading TOO much can be detrimental to your trading career because you need to account for losses. Don’t just think you can win 30 trades in a row and it’ll be okay. The more you trade the more losses you may incur, which again, boils down to risk management!

Now if you’ve been around traders or have been trading for a bit, then you’ve definitely heard the term “FOMO”, which stands for “Fear of missing out.”. Fear of missing out plays a huge part in excessive trade placements, as you always feel like you’re missing out on a trade.

6. Micro-managing a Trade Once It's Placed

How do you feel when your boss is checking in on you throughout your entire shift? You feel like they do not trust that you can do your job correctly. You’ve been through your 3-6 months probationary period, took the required training, and yet they’re watching you like a hawk. Well, guess what, your trades feel the same way. Maybe not, but you get the point.

You’ve studied day and night while practicing in your demo account, yet you still do not trust that your analysis will play itself out. Let’s say your stop-loss is 10 pips away from being hit and you’re staring at the chart. You’re nervous watching price move closer, maybe biting your nails in anticipation of the oncoming loss. What happens next? You close. Price was still about 5-8 pips away but you closed anyway. Once you close out price immediately reverses in the direction of your analysis and slaps your profit target. On the flip side, let’s say that price is going in your favor and you’re staring at the charts with a magnifying glass. In this particular trade, you set your stop-loss at 30 pips while your take profit was at 90 pips. You see that you’re up 30 pips, and instead of letting the trade play out, you take the money that’s on the table. What was your risk to reward ratio? Before you touched anything you had a 1:3; after closing, you now have a 1:1. Does that help you for the week? Not necessarily because your next trade may hit your stop loss of 30 pips and now you’re at break-even when you would’ve been up 60 pips for the week. Treat your trade how you’d want your manager at work to treat you. Ease off a bit and trust your own analysis.