TOTW What's the dumbest trade mistake you ever made?

[Als]

I was thinking it would be kinda cool to highlight a different thread like this each week, an open-ended question that everyone can contribute to then rotate it, say every Friday. What do you think?

I could use the same notification box that's at the top of the page now, to bring it to members' attention.

good idea

and why not to send mail notification about new posts in such a thread.........
say once a day.........

 

[Sharky]

good idea

and why not to send mail notification about new posts in such a thread.........
say once a day.........

Thanks for the feedback Als. You can manage that yourself with the subscription system, just head over here: http://www.trade2win.com/boards/profile.php?do=editoptions to the 'Default Thread Subscription Mode' and turn on instant or daily email notifications.

 

[dr.blix]

1. Traded live before having even the faintest clue what I was doing.
2. Thought my gains were due to natural ability rather than the luck of being in a general enormous trend.
3. Lost 40% of my account (5K) on one trade because I was trading whilst utterly distracted (plus being clueless). Couldn't face opening another position for about 3 months. I eventually clawed a couple of K back before doing the most sensible thing I'd done in a long time which was to stop completely.

 

[Sonicscooter]

Some good reads, most on topic, seems to have been a successful thread so far.....Happy days........

 

[SpreadDoctor]

1. Traded live before having even the faintest clue what I was doing.
2. Though my gains were due to natural ability rather than the luck of being in a general enormous trend.
3. Lost 40% of my account (5K) on one trade because I was trading whilst utterly distracted (plus being clueless). Couldn't face opening another position for about 3 months. I eventually clawed a couple of K back before doing the most sensible thing I'd done in a long time which was to stop completely.

indeed a sensible move for most. Only the most mentally astute, well capitalised need apply.

 

[SpreadDoctor]

indeed a sensible move for most. Only the most mentally astute, well capitalised need apply.

i just realised that came across as though it was aimed at dr.blix. It wasn't at all dr.blix if you are reading. What triggered my post is that I am meeting up with an old friend later in the week and he mentioned on email he has started trading FX and is 'ready' to go live. He mentioned this to me as he knows I am a trader. He said in the email he wants to earn some extra money at home in the evening after work.

Alarm bells were ringing in my head. This is a tough game and imo unless you have a tick in the following boxes you are set up to fail.

* 100% committed - no other job/ no other distraction
* Well capitalised - not to use it all but to withstand emotional pressures
* Top decile intelligence - be honest with yourself are you in this bracket. If not then understand you are competing against PHDs and industry veterans who have been in the game 10+ yrs.

Dr Blix's post was good advice, in that the most sensible thing for the majority is to get out of the game.

 

[SlowlyButSurely]

Alarm bells were ringing in my head. This is a tough game and imo unless you have a tick in the following boxes you are set up to fail.

* 100% committed - no other job/ no other distraction
* Well capitalised - not to use it all but to withstand emotional pressures
* Top decile intelligence - be honest with yourself are you in this bracket. If not then understand you are competing against PHDs and industry veterans who have been in the game 10+ yrs.

Dr Blix's post was good advice, in that the most sensible thing for the majority is to get out of the game.

I both agree and disagree with your comments.

1) Agreed - You need to give trading your all and need to make it your main focus. You cannot just casually make a few trades here and there hoping to make some cash for a new car or holiday each year. That said I think you can work another job whilst doing it, you just need the right approach. Spending your commute catching up on overnight news, spending your lunch reading up on the latest news from the morning and then another hour in the evening after work catching up on the rest of the day's events can keep you informed well enough as a swing or position trader. That said learning to trade and be profitable in the first place will take you at least a year in my opinion. Hard but not impossible.
2) Agreed.
3) Disagree - what are you basing this on exactly? I have met a lot of traders working at some of the biggest trading houses and IB's and they don't have PHD's, MA's or in some cases even University Degree's. What I have found is that those who do well are the ones who can handle pressure and make calculated decisions very quickly without fear. Sounds simple but it's a rare enough talent.

 

[Jason101]

Thinking it can't go down for ever!

 

[Sharky]

Some good reads, most on topic, seems to have been a successful thread so far.....Happy days........

Now you've got to help me come up with a new one for this Friday. My idea for TOTW this week went down like a lead ballon.

 

[gerryg]

1. Traded live before having even the faintest clue what I was doing.
2. Thought my gains were due to natural ability rather than the luck of being in a general enormous trend.
3. Lost 40% of my account (5K) on one trade because I was trading whilst utterly distracted (plus being clueless). Couldn't face opening another position for about 3 months. I eventually clawed a couple of K back before doing the most sensible thing I'd done in a long time which was to stop completely.

Interesting..And how you managed to get over such mental devastation? (I mean losing 5K and bolstering yourself to keep up with the go)

 

[robster970]

Now you've got to help me come up with a new one for this Friday. My idea for TOTW this week went down like a lead ballon.

Best leave the content generation to the users Sharky.

Why have a dog and bark yourself?

 

[SpreadDoctor]

I both agree and disagree with your comments.

3) Disagree - what are you basing this on exactly? I have met a lot of traders working at some of the biggest trading houses and IB's and they don't have PHD's, MA's or in some cases even University Degree's. What I have found is that those who do well are the ones who can handle pressure and make calculated decisions very quickly without fear. Sounds simple but it's a rare enough talent.

good post but I would argue the following: Any new hire IB traders in the last 10 years will likely have a minimum of 2:1 from a reasonable uni in a mathematical subject, most will have a 1st and some sort of Masters. Some older traders you refer to who have no qualifications are a dying breed. Any new hires to IB trading these days will almost certainly have a 1st from a decent Uni (given the watering down of Uni standards), they will also likely have relevant internships on their CV. These people will categorically be amongst the top decile in terms of intelligence. Personally I believe trading is akin to a performance sport of the mind and if you are not in the top decile you will over time bleed out your account and lose.

 

[iMusingKiMi]

I think I almost can post a comment here daily unless it was weekend because there will always be a mistake no matter minor or major terrible mistakes I have made. So what my latest dumbest mistake? Anxious, a human nature most common problem and the most common mistake that trader out there made. I was too anxious to SELL on GBP/AUD yesterday without getting another confirmation after it rejected from equestrian channel lines. By the end, I have gotten stopped out from the trade, an the major mistake comes visiting me again because I didn't enter it on a BUY because of the SELL SL hit. Nice huh?

 

[dr.blix]

Interesting..And how you managed to get over such mental devastation? (I mean losing 5K and bolstering yourself to keep up with the go)

Ironically if I'd have just held on to the shares I'd have not only got my money back but I could have made around 25K. Admittedly this would have taken around 5 years, but it all comes down to sheer ignorance and the inability to see through the panic of a large loss when you've never suffered one before. Switching seats from attempting to be a trader and just being an investor (position trading instead of day trading) would have solved everything in this instance, but that only comes with hindsight (experience).

Anyway, in answer to the question I opened an SB account (literally using pence not pounds) and used it to teach myself at a faster rate than buying and selling UK equities. I gained enough confidence to start buying equities with my broker again. It was all very draining and it was tough clawing back a couple of K after the loss.

 

[malaguti]

'Trading without the recommendations of any Financial Advisor' is probably the most common mistake done by new traders.

'Trading with the recommendations of any Financial Advisor' is probably the most common mistake done by new traders.

 

[SlowlyButSurely]

'Trading without the recommendations of any Financial Advisor' is probably the most common mistake done by new traders.

I'd say your advice was anything but epic!

 

[SlowlyButSurely]

Here's one that was not by me, but something going round the media which is actually quite a concern in my view and involves the most clueless of investors - the general public.

This whole collapse between pension funds and hedge funds. Although the fees are certainly high and they should be lowered, I don't think the answer is looking at an index tracker. The skill of a hedge fund manager is not necessarily just in the boom years, but how they hedge their risk for the eventual crash or large correction that comes round every so often.

I'm extremely concerned that these numbskulls are going to have people's pensions pegged to the index and realise their mistake once it's too late as per usual. Good thing there's the SIPP!

 

[sethmo]

Had a good giggle reading through some of these stories, not because I'm laughing at the author, but because I've been there.

The two most memorable for me were when I was still fresh to trading, I played with binary trading. Practised a little on the demo account (for about a week - mini-mistake 1), scaled up, put R10k in a broker's account, proceeded to lose R4k in one trade (about 10 mins) because I kept moving a stop.

Second one was less expensive. Fast forward a few years, got me a new broker and a proper plan and trading system. Opened a short on the USD/ZAR. Stop kicked in on my software, and closed the trade...or so I thought. Every day, I got a statement from the broker showing the trade. I thought it was the summary, until sometime, about 3 months later, I thought, "Hang on, those numbers don't look the same!" Opened a few of the previous emails, noticed the current price numbers had changed, opened MT4 and..."Hey, that trade is still open!" -600 or so points later. Luckily, it's micro-lots and it only cost me a few dollars...hahahaha...I honestly wasn't even angry about this one. I just had to laugh it off!

The learning has been a slow process. The best lesson I've learnt so far, I think it's been echoed in some way or another in the previous posts is, "There is no Holy Grail". If took many years to finally accept and internalise that, and you know what? It takes the pressure right off! I've been able to learn and play freely, make a little here, lose a little there, and take it all in my stride.

One thing I must say about trading is that it's taught me a lot about myself. How to be clear, focussed, assertive. To prioritise and filter things, to be able to say no, how to research and learn. Even if I ultimately never make money from the markets, I think that knowledge I've gained is priceless.

 

[MistakesWereMade]

Shorted Tkmr the Ebola Virus stock and didn't bother to put a stop loss on it haha!

Woke up a few hrs to see it skyrocket from 26.50-29.50 due to analyst upgrade.

Lesson learned here...