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Thread: 3 habits that prevent traders from making profit

  1. #1
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    3 habits that prevent traders from making profit

    Hi traders!

    Successful trading is often not about unique trading system, it’s about doing certain things over and over again, or I would rather say – not doing them. Many beginner traders often do the same mistakes over and over again and if you would simply avoid what they do (or even do the opposite), you would get an edge on the market.

    I created my own TOP-3 list, you can add some more in commentaries to this post. I haven't uncluded money managent here, just chart patterns (market behavior) that traders fail to read properly.

    Selling «expensive» and buying «cheap»

    Most popular version of this principle is «buying bottoms» and «selling tops». When price suddenly breaks out from some range (say, to the upside) and starts to move rapidly, most traders will sell against this rally. That’s an instinct. If we’ve seen before small volatility and absence of significant price action to whatever side, we tend to deny breakout, we treat to new prices as «unfair» and rush to open a trade. Why in this case most traders are in hurry? They thing that current price action won’t long last and price will quickly drop back to the previous trading range.

    Look at yesterday’s example of NZDUSD:

    Attachment 10474

    It has rallied heavily, and believe me – there were many traders caught in short positions. Price has finally moved back to day opening, but I’m not sure that any short-sellers could benefit from that movement. You can’t enter short position (or long position, any position) if you don’t know your risk, if you are unable to calculate or estimate it. You can, of course, but it won’t be low risk trade, your risk will not be defined (don’t tell me that you know your risk because you have your stop-loss)

    So, in most cases shorting against such rally can be only reasonable when market is overbought and ready to liquidate to the downside. Such situations are pretty rare and this topic goes beyond our post.
    To avoid catching tops and bottoms, I recommend to switch between timeframes from time to time.
    What is cheap for one timeframe trader, may be expensive for other timeframe trader.


    Catching the «whipsaw»

    The second habit of beginner traders is to be aggressive after big price swings. Let’s say, we had news announcement and market reacted emotionally, We can see whipsaw with significant volatility.
    Most traders, who are bored with previous low volatility, think that market is going to move now more rapidly, more aggressively.
    But truth is that often market consolidates for 2-3 days after that, nothing happens, volatility goes down again. It’s very easy to be caught in such price action.

    Attachment 10476


    «Trading near support» (resistance)

    Third habit is too much reliance on horizontal lines that are considered to be support or resistance. In fact, support and resistance are often areas, not lines. I mean, real support and resistance areas, not local levels where day traders put their positions.
    When support/resistance «line» is already visible for everyone, it no longer provides good opportunity. Many traders can see those lines, they can calculate risk and they will enter either to the short or to the long side (trading breakouts or reversals) placing their stops beyond this line. So, a lot of orders will be concentrated near those lines, and market will not have reason to leave this level – the more liquidity it has near certain level, the less reasons it has to go away from it. The most expectable scenario is «whipsaw» near such «levels».

    Attachment 10475

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  2. #2441
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    Quote Originally Posted by cutiekc View Post
    Common one which I can talk more about is when the trader is being such a trader who does not look at the history of the way they have been trading to learn more about the market. There is no way to become a profitable trader if the trader is not making good evaluation, you know, it is so much important to make good evaluation on how much successful we will want to be in the market.
    A trader who is not bothered to look at his past performance on getting repeated losses is actually reluctant to work hard and is emotionally unstable. Without learning we will not know the market well enough to take decisions that can be good and profitable. It is all through about risking money and earning in Forex and so it is quite normal that we are disturbed by our own emotions during trading.

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  3. #2442
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    Quote Originally Posted by Abhishekwala View Post
    A trader who is not bothered to look at his past performance on getting repeated losses is actually reluctant to work hard and is emotionally unstable. Without learning we will not know the market well enough to take decisions that can be good and profitable. It is all through about risking money and earning in Forex and so it is quite normal that we are disturbed by our own emotions during trading.
    you are right in actual our past is our experience if we work on past we can learn many things we can understand what issues i have faces and what i can do to make it good, if we do not evaluate our trade, if we do not learn from past we can repeat mistakes and in end we will lose all, so do trade and do on base of your learned trade, learning process should be best one because our earning is based on it

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  4. #2443
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    There are many more things to learn, some traders don't really get to know what they should do and then what they shouldn't. I will only suggest that the demo account be used more better way, because with the demo account been used in the right proper way, I think the lack of skills being the number one reason why traders fail can be resolved.

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    Quote Originally Posted by Makaveli View Post
    There are many more things to learn, some traders don't really get to know what they should do and then what they shouldn't. I will only suggest that the demo account be used more better way, because with the demo account been used in the right proper way, I think the lack of skills being the number one reason why traders fail can be resolved.
    Human has one simple habit that they can get easily satisfied for the things they currently have for now. While the other traders in smaller quantity still looking for something new to learn to improve themselves to become better everyday. In the first case, people who do this way will always limit themselves from something new and deny new logic easily. Of course when they prevent themselves from learning new things, they will not improved as they stay the same for long time.

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    Personally I like to sell expensive and buy cheap but maybe there is difference between traders what they imagine to be cheap or expensive. The market usually goes thgrough this cheap or expensive and trader should wait an hour or two after he have noticed something cheap or expensive and open orders 2-3 hours before market will be closed. The best price should be at that moment.

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  7. #2446
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    What would cause traders to actually loose and find it hard to make profits is when they do not learn to build a solid knowledge and experience to trade forex. If they lack the right management, it will be very difficult for them to make profits and it will become so hard when it comes to forex. Profits is every traders target and hence we can manage our risk and learn to build our experience we will know what best decision we can make which will however result to profits.

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  8. #2447
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    If you ain't patient with the market in such a way that you forget about taking trades so much faster and then see reasons why to make good analysis each and every time, you will loss your money and regret it, So, it is to say that impatient is one of the reasons why traders has always been losing their money and it should be worked on, else there will be no improvement at all.

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  9. #2448
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    Quote Originally Posted by Tonycee View Post
    What would cause traders to actually loose and find it hard to make profits is when they do not learn to build a solid knowledge and experience to trade forex. If they lack the right management, it will be very difficult for them to make profits and it will become so hard when it comes to forex. Profits is every traders target and hence we can manage our risk and learn to build our experience we will know what best decision we can make which will however result to profits.
    Naturally at novice stages when there is lack of knowledge and experience, earning in Forex will be difficult and more risky. The market is complex as well as alluring and will not allow to catch opportunities so easily. Sometimes the prices might allure us to be attractive and we feel to buy or sell just to later find ourselves trapped in loss. Under the influence of feelings we will not be able to take the right decisions in the heat of trading.

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  10. #2449
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    Not being patient has the most reasons why people don't get to become profitable in the business they do, because patient will take you to being able to learn and then fully understand the business and all that. But when you are not patient, that is when you get to see yourself being in a hurry to make money, being in a hurry to take trades without good confirmations.

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  11. #2450
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    Quote Originally Posted by Makaveli View Post
    Not being patient has the most reasons why people don't get to become profitable in the business they do, because patient will take you to being able to learn and then fully understand the business and all that.
    patience is important because in patience if we have it we can do well, wait can clear us about market this is reality, when we wait for more and more time market clearly tell us about our market, it tell us about market direction and everything, so make sure you do but do it after learning,our learning process can make us able to earn, if we are in hurry to earn then simply we can lose all

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