Don't Overtrade
Overtrading is another important pitfall to avoid. Successful traders aren't constantly getting in and out of positions or putting on positions solely for the purpose of being in the market.
For new traders, trading is exciting and being in the market offers an excitement not unlike the action in casinos. And this is just another reason why the line between trading and gambling can get blurred for new traders. It is important to not trade for the excitement but only if a high probabilty opportunity is available.
Sometimes when the trading platform is open in front of you, the temptation to put on a trader or end a trade starts to build. It may even compel you to change your strategy mid-game or start moving your stops in order to "better" your trade. As I've suggested before, the best way to avoid trading with emotions is to stay out of any situation that may cause those emotions.
For this I would suggest not having your trading platform open all the time. Once you have put on your trades, close the application and monitor your trades via other reporting methods. I use Yahoo Finance. For approximately $100 / year you can get realtime data streamed through Yahoo Finance, which otherwise has a 20 minute delay. This allows me to monitor positions and pricing without being in a situation where I can jump in and out of trades on a whim.
Constantly having your platform open can cause you to overtrade. Besides putting you in an emtional situation, overtrading can rack up commissions for the broker, which may not seem much at first, but they quickly add up...... Trust me!
Happy trading...
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