Overtrading is a critical error—entering too many positions, especially in low-volatility markets, erodes profits through fees and emotional fatigue. Poor risk management, like risking 5-10% of capital per trade instead of 1-2%, can wipe out accounts fast. Revenge trading after losses leads to impulsive decisions and deeper drawdowns. Ignoring transaction costs (fees, slippage) turns theoretically profitable strategies like arbitrage into losers. Chasing pumps without confirmation often traps traders at peaks.
Using excessive leverage (e.g., 50x on futures) magnifies routine volatility into liquidations. Abandoning a strategy during short-term drawdowns prevents it from working long-term. Neglecting macro trends (e.g., trading altcoins against a falling Bitcoin) ignores market context. Finally, backtesting without real-world variables like liquidity gaps creates false confidence.
Fix these by:
- Sticking to 1-3 high-conviction trades daily
- Automating stop-losses and profit targets
- Tracking fees religiously
- Testing strategies in demo mode first