Some of the symptoms and reasons are:
- Freezing/unable to pull the trigger: This is due to fear of being wrong.
- Impulse/Chasing: Freezing often leads to chasing, i.e. entering where you should be exiting. This is fear of being left out. Late entries mid-bar fall into this category.
- Being shaken out: You havent mentally accepted your risk.
- Unable to hold, exiting early: You are not confident of your read.
- Revenge trading: Emotionally upset at loss, want to win right now!
- Fading a strong trend instead of trading with trend: Perfectionists fall for this since they want the market to validate their genius ability to predict where the market turns exactly.
- Letting a winner turn loser: Caused by greed and high expectations.
- Scaling into a losing position: Caused by the need to be right. Trader will continue to scale in until the pain of losing money is greater than pain of being wrong.
- Reversing your position on a loss: Some setups are reversible, for example failed A2 is usually an indication of two more legs in the new direction. However, this is about reversing your position on any failed trade without knowing if its reversible.
In addition there are poor trading habits that cause lower success rate:
- Trading off poor signal bars: Poor signal bars sometimes work but it takes experience to trade them correctly. In particular, they need to have some strengthening factors such as being a BT or being on the ema. Most traders would do best to skip the trade and let it run without you.
- Trading BW/OL: Most trades in BW/OL are likely to fail. Yes, some breakouts do occur out of BW but you are usually better off trading the failure or BP of the breakout.
- Getting in before the signal bar triggers: Some traders are anxious to get a better price so they buy before the signal bar triggers.
If you have any common mistakes that you would like me to address, just post a comment on this blog post and I will add it to the list.