In all my years of trading and talking to fellow traders, I have noticed that retails traders suffer from mostly 3 mental blind spot which affects there trading .Hopefully, after reading this, you will be able to see them coming and stop them before they destroy your account.
Being Undisciplined and Uneducated
A trader who lacks discipline can never make a successful trader. Most of retail traders are not having proper education and on the top of that not having discipline a sure shot recipe to blow.
The main culprits are what I like to call ‘System Jumpers’. These are traders that are constantly tweaking and changing their trading methods. These traders do not realize that learning to trade a system efficiently takes time.
System Jumpers are traders who lack the discipline to stick to, and learn how to trade, a system. They try it for a week and when it doesn’t work they jump to the next system or method.
Need to be Right on each trade
Typical Story of Retail trader . Traders opens his platform and enters a long trade as he saw someone saying today market should be bullish. He targets 30 Points target with a 15 points SL in NIfty Future. The trade goes against him immediately.
It goes down, first five points, then ten points, and then 15 points. When it reaches 15 points, trader decides he doesn’t want to lose another trade and moves his stop loss down.
The price keeps falling and trader continues to move his stop.
Eventually trader closes out his trade and he has lost a huge portion of his account.
Most of traders are not able to accept that they are on the wrong side of a trade. They keep pushing the stop down in the hope that it would eventually turn around. The need to be right is an account killer.
The Desire to be Rich
The desire to be rich manifests itself in many ways. If you think about it, the majority of the issues that newbies have, such as overtrading or poor money management, stem from the desire to be rich.
Trading will not make you rich in the short term. It will likely take years before you’re trading well enough to leave your day job. If you started trading last week and you plan to quit your job in six months, because you anticipate being rich enough to trader for a living , you are living in a fool’s paradise