#TradingMistakes101 Gemini

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#TradingErrors101

Below is a breakdown of common trading errors, often labeled as #TradingMistakes101, to help you avoid them:

1. Lack of a trading plan (or not following it):

The mistake: Opening trades without a defined strategy, entry and exit points, risk management rules, or position sizing. Or having a plan but deviating from it due to emotions or impulses.

Why it's bad: It leads to impulsive decisions, inconsistent results, and difficulty analyzing performance. You cannot learn from mistakes if you do not have a consistent approach to evaluate.

2. Poor risk management:

The mistake:

No stop loss orders: allowing losses to extend indefinitely, hoping the market will turn.

Incorrect position size: betting too much of your capital on a single trade, resulting in significant losses if the trade goes against you.

Risking too much per trade: exposing a large percentage of your trading capital to a single trade.

Why it's bad: A few bad trades can ruin your entire account. Proper risk management focuses, above all, on capital preservation.

3. Emotional trading (fear and greed):

The mistake:

Fear: Panicking and closing good trades prematurely, or holding onto losing trades for too long out of fear of a loss.

Greed: Excessive leverage, taking on too much risk after a winning streak, or refusing to take profits because you think the market will go up.

Revenge trading: attempting to recover losses by immediately entering another trade, often without proper analysis.

Why it's bad: Emotions cloud judgment and lead to irrational decisions that undermine your trading plan.