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#TradingMistakes101 The PDF you've shared, titled "Trading Mistakes 101" by Steve DeWitt, is a practical guide from The Forex Journal (November 2008) that identifies 12 common mistakes traders make in the Forex market. Here’s a detailed explanation of the concepts from the document:

1. Not Using a Trading Plan

Most traders jump into trades without a predefined plan. A trading plan includes:

Entry and exit strategies

Stop-loss placement

Profit targets

Risk assessment

Time expectations

Without this, even large paper profits often turn into real losses because the trader didn’t plan where to exit if right or wrong.

2. No Money Management Plan

Even with a good strategy, poor money management ruins traders. Key ideas:

Understand both risk/reward ratio and win/loss probability

Example: Risking ₹1000 to make ₹500 is okay only if the trade works 8 out of 10 times

Learn to calculate statistical edge, not just focus on rewards

3. Not Using Protective Stop Losses

Using mental stops is dangerous. Emotional decisions override logic when losses mount. Always:

Use hard stop-loss orders

Never remove or increase stop losses to take on more risk

Accept that hitting a stop often means your analysis was wrong

4. Taking Small Profits, Letting Losses Run

Due to fear, traders exit winners too early and let losers continue in “hope.” Fix this by:

Having pre-planned take-profit and stop-loss levels

Avoid emotionally influenced decisions mid-trade

5. Overstaying Winning Positions

Greed makes traders wait “just a bit more.” This often leads to:

Giving up large profits

Watching a winning trade go back to break-even or loss Use trailing stops or exit at pre-set targets

6. Averaging Down Losing Positions

Adding more to a losing trade (“doubling down”) without a plan is dangerous in Forex due to leverage. Exceptions:

Only do it if your strategy is pre-designed for such scaling

Always use protective stops across the entire position

7. Increasing Risk After Success

Confidence from success leads many to:

Increase trade sizes

Risk more per trade (beyond 6-16%, or even 25%)

Beginners should limit exposure to 1–5% per trade, and avoid overconfidence traps

8. Overtrading

Taking too many trades, especially during market consolidation or after a streak of losses, leads to burnout and capital wipeout. Solutions:

Never risk more than a fixed % of your account per trade

Ideally, trade one position at a time (unless hedged)

9. Not Taking Profits Out of the Account

Most traders leave profits in their accounts, hoping for the "big trade"—only to lose it all. Instead:

Set equity milestones (e.g., every ₹20,000 earned, withdraw ₹5,000)

Diversify earnings outside of your trading account

10. Changing the Plan Mid-Trade

Don’t alter your strategy during market hours unless critical news breaks. Pre-plan your moves during calmer hours and stick to them

11. Lack of Patience

Many trade for the thrill, not profits. The average life of a trader is 5 minutes to 9 months. Solution:

Wait for high-probability setups

Be okay with no trades for days

12. Lack of Discipline

The most crucial skill. You need discipline to:

Follow your plan

Cut losses

Take profits

Stay emotionally neutral

A good exercise: Watch the market for a full day without trading, even if perfect setups appear. This builds mental control

Final Insights