1. Lack of direction. Traders often fail to establish clear goals and create plans to achieve those goals. When traders fail to develop complete business and trading plans before entering the market they are setting themselves up for failure.
2. Impatience. This occurs when traders try to accomplish too much too soon, or expect to get results far faster than is truly possible. This creates a situation where they are likely to become frustrated and deviate from their plan.
3. Greed. When traders try too hard to make a lot of money in a short period of time, failure isn’t far behind.
4. Taking action without thinking it through first. All trade entries, modifications and exits should be carefully planned out in advance. Randomly entering, modifying and exiting positions based on moment by moment emotional thoughts creates large losses.
5. Indecisiveness. A trader who is unable to make key decisions in the face of difficulty is dangerous to himself. Any major decisions should have been planned for in their trade plan. In the event they planned poorly and don’t know what to do, their decisive decision should be to exit.
6. Diffusion of effort. A traders who tries to trade too many things will miss opportunities and market cues that are obvious to a trader who is focused on a limited number of tasks.