[Time2Trade]

Hello everyone

I’ve been investing over a longer horizon for years but getting more interested in shorter trades, eg swing and intraday. I was wondering though, what are the common mistakes new day traders make? I’m asking so I can hopefully avoid them!

Thank you

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[Dylan]

Buying stocks just because they are trending on Twitter. That’s a fast way to lose money!

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[Pedro]

Hey, as someone who focuses on technical analysis, I’ve noticed new day traders often misinterpret chart patterns so I’d spend time in a simulator before putting money down. I also used to overlook the importance of volume in confirming trends, which can lead to false signals.

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[Jimbo41]

Not using trailing stops is a big faux pas!

I’ve wasted profits before because I didn’t lock down those gains when the stock price was shifting in my favor.

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[Ethan]

You wont get anywhere if you dont take risk management seriously. It’s absolutely fundamental.

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[Daniel Ed]

I’m pretty new to the day trading world but I’ve already learned some hard lessons. One mistake I made early on was putting too much of my cash into single trades. People bang the drum about wallet management for a reason.

I’ve also fallen into the trap of following supposedly ‘hot tips’ without doing my own analysis. Would you believe some of these hot tips are actually ice cold!

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[Steve]

As a somewhat seasoned trader, I’ve seen lots of beginners repeat the same mistakes. The major error I’ve seen is overtrading. When I started, I thought more day trades meant more chances to make money, but it actually led to significant losses due to transaction costs and poor execution quality.

Less can be more.

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[Major Trader 35]

Hi,

This will sound really obvious but not having actual exit points (I’m talking stop loss and take profit orders) defined before moving into a day trade.

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[Time2Trade]

Wow, thank you everyone for replying so quickly.

This is really useful to know.

I know I need to try and take on board as much of this as possible and hopefully not have to learn the hard way myself with many of these!

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[Christian Harris]

Day trading is tough because there are so many factors to consider. From my experience, these are the most frequent mistakes I think most new traders make:

No Trading Plan: A well-defined trading plan is vital. It should outline entry and exit strategies, risk management rules, and precise trade criteria. Without a plan, emotions can hijack logic, leading to impulsive decisions.

Overtrading: New traders often fall prey to overtrading, taking too many positions, or investing too heavily in single trades. Moderation is key.

Chasing Losses: Don’t chase losses! This “revenge trading” fuelled by emotions often leads to even more significant losses as rational analysis takes a backseat.

Ignoring Market Conditions: Ignoring broader market trends, economic data, and news events can be costly. Understanding market conditions helps avoid trading against the prevailing direction.

Emotional Trading: Fear, greed, and impatience can cloud judgment. Emotions can fuel trading behaviors such as exiting trades too early or late, clinging to losing positions or taking unnecessary risks.

Good luck!

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[Steve]

Big time concur with this last point. In the long run keeping a lid on fear and greed is absolutely critical.

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[DiamondDozen]

It’s been said already but revenge trading can be a killer! You have to keep a level head or you can just spiral and lose more.

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[Trade2Day]

Thinking day trading is straightforward. It isn’t. It takes time, skill and mental resilience to master.

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[Christian Harris]

Day trading is the most difficult type of trading to master.

I highly recommend beginners start by swing trading on higher timeframes and then work down the timeframes….

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[Ethan]

Not taking the time to learn from mistakes. If you don’t assess losing trades to understand went wrong you risk making the same errors and seeing more losses. It’s too easy to focus on the decisions you get right but you have to challenge yourself on the ones you didn.t

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[Tom_Topper]

Getting lucky early on and then thinking they’ve sussed it. The reality is you can place all the ‘right’ trades and still not make money due to high transaction costs, price slippage blah blah blah.

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[Ethan]

Amen to that.

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[Seb_2798]

If you’re just starting out in day trading, you might not be aware of slippage. For those that don’t know, it’s the difference between the price you expect to pay for a trade and the actual price when it gets executed.

In wild, volatile markets, slippage can really hit you hard, leading to orders being filled at worse prices than you anticipated. This can mean higher costs than you were counting on.

So watch out, especially if you’re working with tight margins and using stop losses.

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[James Barra]

A valid point to call out Seb.

Beginners should learn more about the factors that can influence slippage in trading, including execution speed and quality.

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[Robbo]

Having a complete lack of patience. Successful trading, whether day trading, swing trading or position trading, generally requires waiting for optimal setups and being consistent in following your strategy. New traders often act too quickly or fail to stick to their own rules, particularly after a few losses or wins.

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