Mistakes List

[Josh Patterson 2]

I typically learn much more from mistakes than I do from success. Anyone else? To me the worst blunder one can make, besides the initial fault, is to not learn from it.

 

However, a huge accomplishment is if you can learn from others mistakes and never have to make them on your own. I believe such a thing is precisely why this community exists; to help each other learn. I searched for this before starting a new topic but didn't find a simple list of common/egregious mistakes, so let's do this.

[Josh Patterson 2]

I'm guilty and make the mistake of getting "attached" to a stock. I've had to work on personal biases to certain tickers (both good or bad) leading me down the wrong path versus what the chart is saying and/or other factors like news.

 

So now what I do is literally tell myself before most trades, "This stock isn't your friend or enemy. Just trade it."

[Robert H 455]

My biggest mistakes include, but are not limited to:

-Revenge trading. Repeatedly trading the same choppy stock over and over as if it personally owes me money.

-Over trading. Thinking I can recover from losses by taking low quality setups in rapid succession.

-Not stopping at daily goal or 11:30 AM. Slowly giving back all my gains.

-Not stopping out. Freezing like a deer in the headlights and letting a small loss grow into a big one.

-Not taking a break after a bad trade. Continuing to trade when my psychology is in tatters.

-Thinking I need to be in every move. Forcing bad trades rather than waiting for the chart to provide confirmation.

-Increasing share size when losing. Trying to double down and recoup losses.

 

After seeing how consistent my trading can be when not doing the above, I've realized that trading is 90% psychology. When I'm able to be disciplined and controlled, the money comes easily. When I regress and repeat bad habits, losses can quickly spiral out of hand.

[Dima 10]

My favorite mistakes (favorite because I make them so often):

 

- Taking too many shares in hopes of a bigger profit. When I do this, to avoid going over my max risk on any single trade, I inevitably set my stop loss too close to my entry, which means that I'm much more likely to get stopped out before the stock truly moves against me.

 

- Not being comfortable with the possibility of losing money on a trade. When this happens, I either stop out too early (taking a small loss only to see the stock go against me, having never hit my target) or take profit too quickly at the first sign of resistance. Stocks rarely just go through the roof and not recognizing that pull backs are inevitable, even for stocks going in my direction, is a great way to cultivate FOMO.

 

- Not stopping once I have a decent profit on the day. I've come to believe that your profit target should be set to be some multiple of your maximum risk on any one trade. If I decide that my max risk ® on one trade is $100, my profit target for the day should be something reasonable like $150 or $200. Once I make $100, I find that my fear of losing those profits often results in placing tighter stops, which makes it more likely that I slowly give back my profits to market choppiness. After recognizing this, I've started switching to sim once I hit > 1 R. While it's below my profit target, I'm happier to slowly grow my account every day than ruin my day with the regret of having given my earnings back to Wall Street.

 

- Jumping the gun around VWAP. When stocks get near VWAP, they're truly like a tennis ball that clips the top of the net. Instead of gambling and guessing which way it'll go, I've discovered that it's best to accept that you might get a worse entry, and simply wait for a sign of the VWAP being lost in one direction or another before entering a trade. Otherwise, you'll find yourself chopped out.

[Robbie Williams 12]

My mistakes at the moment are:

 

- Not looking at every piece of information that is available to me before placing a trade (level 2, volume etc).

 

- Taking profit too early, which equates to a less than 2:1 profit ratio

 

- Not positioning my stops as a technical or reasonable level. Rather, just saying "oh I want the stock to move 30 cents and ill take profit, so I'll make my stop loss 15 cents). And speaking of stop loss, also not using a technical or resistance/support level as my profit target - sometimes just taking profit at a random number.

[Josh Patterson 2]

Robbie I am very guilty at times of that last one. Picking random PT levels that I want rather than having a plan.

[Stuart 16]

Thanks to Josh for starting this useful thread! I am still taking and re-taking Andrew's classes, and am looking forward to the new material he spoke about in chat today.

 

So far in one week of sim I have:

Made dumb impulsive trades with no plan

Made good trades but bad position sizing

Used the scroll wheel to zoom in on a chart, only I had the share size montage active and accidently increased my share size to 6000 and didn"t notice until I hit buy!! (now I bet thats a new one. lol)

Chased stocks averaging up or down.

Waited to late in the trade day to close my position and it was left unfilled. (I got a notice from the system before I shut it down that I might be in margin call!)

I can see how this takes some time before going live with any amount of real money!

 

Thanks again!

 

 

[Dread7 0]

I was consistently making my daily 4 out of 5 days a week until I made a huge mistake and pre-traded for a $1000 loss in the simulator.  After that I lost between $50 and $275 each day until today.  I took a break and went for a motorcycle ride with my group to the Dragon and it hit me what my issue was.  I just couldn't see it while I was trading.

 

Since that loss I've been subconsciously wanting to make it up.  So I analyse my first trade and it's profitable for $100 - $200.  But I set my daily for $350 - $500.  When I was making money consistently I would make a trade, the stop, then re-analyze and tell myself that if I didn't see a great opening I would not trade anymore for the day.  But after the blunder I would just try and catch the same stock on the flip.  As in if I bought and made money I would immediately short.

 

Today I added that to my cue card and now when I make my first trade I force myself to get up and get more coffee.  I made 4 trades for $476 with one being a loss of $40.

 

From this day forward if it's not juicy, I am not taking a bite even if it means not trading.  Because making up losses is BS

 

 

[wpicotte 16]

I repeated mistakes today I'm sure others have mentioned, and that chat room regulars will recognize as all too common. At the risk of being repetitive, I need to vent (on myself)...

 

Mistake 1 -- After making a good, early trade on LOW (within 10-min of open) that put me above my daily goal, I continued to trade.

 

Mistake 2 (also, trade #2) -- I followed Andrew into a trade that he called out. I was watching the stock out of the corner of my eye and when he said 'long', which is what I'd been thinking, I jumped in as though I was playing a video game. It didn't work out, I lost a little money, and I continued to trade. Because I managed the loss OK, I don't characterize the trades I continued to make as revenge trading -- I didn't trade this particular stock again -- but it was greed. Also just want to add that I have a habit of muting Andrew for this very reason -- but recently have taken to simply turning the feed down a bit. I think it's a good exercise to hear him mention stocks, or even talk through successful trades, while staying focused on my own trading. Didn't work so well in this example.

 

Mistake #3 -- A bit later in the morning session I got back into LOW. I did so with too large a share size for my risk tolerance. The price went against me but believing I was right about the trade, I hung in too far past my stop and lost all daily profits and then some. And (you know what comes next) I continued to trade, this time sticking with LOW because I just KNEW it was a short. Never took a break. Never walked away for a breather. Just kept at choppy, piece-of-garbage LOW.

 

In the end, I lost 4% of account value. This comes after several consecutive green days with one or two red days during which, by staying focused, disciplined and dispassionate, I effectively managed the losses. This pattern of consistent, steady gains only to take a day of disproportionate losses is a persistent issue with my trading. It is really, really hard to admit that you're wrong. It is really, really hard to "give up" and to turn DAS off while in the red for the day.

 

It is really, really easy to allow days like this to get away from you (me). I'm sure that like other in the chat, I'm a competitive person and first and foremost, I compete with myself. I have come to believe that while this may be a useful characteristic in many areas of life, it's extremely dangerous to trading and for myself, one I must learn to 'put away' while actively trading.

 

As a relevant aside, I struggled today to narrow down the watchlist. In recent weeks I took a page from Brian's book and began watching fewer stocks. I redesigned my desktop to support this approach and have since had enough success to believe that for where I am on the day trading learning curve, focusing on fewer stocks is a good move But then comes a day with a big gappers list of different stripes (low float, mid float, NYSE, NASDAQ, etc.) and I lack criteria for this situation. I suppose experience is the key ingredient here.

[Michael P 4]

I have seen most all of my mistakes in this list (thank you Robert H). The one I haven't seen, that I seem to like to do (because i have done it often), is to project my hopes onto a trend. What I mean is I "see" an upcoming reversal when it is not in the candles. Or I see a continuation of a trend that, with more careful analysis, is not indicated. Of course what I am really seeing is my hope in the form of phantom charts that don't exist.

Instead I need to trade whats on the chart using likely probabilities and leave prediction and hope to the sooth-sayers.

[Patrick O 1]

I have to constantly fight my urge to trade reversals. Have to keep reminding myself that trading reversals is egotistical trading. Don't know how many times I have gone long on a stock in a downtrend and picked up 20 to 30 cents gain when I could have just gone short and watched it continue to make lower lows. Great example: yesterday I made .60 a share on PTCT on the long side. However, doing so I gave up $10 a share I would have made if I had just gone short.

[Carlos M. 232]

Quote

I have to constantly fight my urge to trade reversals.

I find reversals to be difficult to spot as well. There needs to be really good confirmation the stock is going to start changing direction. Brian is really good at spotting them with the famous double bottom. I try to look for those as well but usually if the morning goes well with the ORB's I usually end the trading day. Not very successful on that strategy. 

[nassarsyed 82]

Yes awesome Brian is great at double bottoms. Here is an example of his trade: