#TradingMistakes101 A Common Pitfalls Guide

Here's a breakdown of common trading mistakes that can lead to significant losses, along with advice on how to avoid them:

1. Lack of a Trading Plan:

* Mistake: Entering trades without a defined strategy, entry/exit points, risk management rules, or profit targets.

* Why it's a mistake: Leads to impulsive decisions, emotional trading, and an inability to objectively assess performance.

* How to avoid: Develop a comprehensive trading plan that outlines your strategy, risk tolerance, capital allocation, and specific rules for opening and closing trades. Stick to it rigorously.

2. Poor Risk Management:

* Mistake:

* Over-leveraging: Using too much borrowed capital, amplifying both gains and losses.

* Not using stop-losses: Failing to set predefined exit points to limit potential losses on a trade.

* Risking too much per trade: Allocating an excessive percentage of your capital to a single trade.

* Why it's a mistake: A single bad trade can wipe out a significant portion of your account.

* How to avoid:

* Determine a sensible leverage ratio based on your experience and risk tolerance.

* Always use stop-loss orders.

* Never risk more than 1-2% of your total trading capital on any single trade.