7 Things You Must Stop Doing to Become a Profitable Trader

FinancialWisdom
Sep 12
6 min read

7 Trading Mistakes (and How to Fix Each One)

7 Trading Mistakes

Everyone talks about what you should be doing to become a profitable trader, but no one really talks about the things you should avoid. I'm a big fan of cutting out the nonsense - the moment you cut out the bad, you automatically start improving.

If you can somehow manage to not make any of these 7 mistakes I'm about to share with you, you will instantly become a better trader.

For those new to the channel, don’t forget to check out our library of trading videos, all derived from over 30 years of experience. We also have a fantastic group where I share all my trades, past and future. We also have a bespoke breakout scanner, which is an area I specialize in, finding quality stocks, breaking out with strong momentum, whilst offering low-risk entry points.

That being said, let’s dive in.

The first mistake most traders make is calculating Profits Before the Trade Moves

Stop looking at trades based on what you will potentially make.

How many of you have looked at a trade and immediately pulled out your calculator? "If this goes up, I'll make ten thousand dollars." You start fantasizing about profits before the trade has even moved in your favor.

This is really bad because the moment you start looking at the positives, you get a bias. You only see the good parts. You won't even believe you can lose money on this trade. In return, traders start avoiding their stop loss.

It happens all the time with new traders. They'll look at a trade and say "I'm probably going to make five thousand dollars," cut their risk out, and just hope it will go higher. That destroys their whole game plan every time.

Mistake #2: Strategy Hopping

So many traders find a strategy that works for a week or two, and the moment it stops working, they immediately look for the next one.

If you have a strategy that stops working, your first job should be understanding WHY. Did the market shift? Are you executing poorly? But most traders just go "I'm not making money with this, let me find something new."

What happens is you hop from strategy A to B to C to D, and you never allow yourself to fully develop a real edge. You never build that conviction and confidence you need to be successful.

Mistake #3: Trying to Catch Exact Tops and Bottoms

Several traders get burned because they try to catch the exact bottom or the exact top of a trade.

Our job is to take as much as we can from a move - we don't have to take the whole move. As long as we can get a piece of it with calculated risk and an edge behind it, that's what we should take home.

There are so many traders who will walk away making one or two thousand, and if they held for another week, they could have doubled their profits. When they look back, yes, they get frustrated. But they have to remind themselves - that wasn't part of their game plan. They didn't have any edge over that extended move.

This is the move they prepared for, planned for, and executed for. They got that move, and they need to move on. Don't say "I wish I got in earlier" or "I wish I held longer." Our job is to capitalize on a piece of that move and do it consistently over time.

Mistake #4: Taking YOLO or You Only Live Once Trades and Home Run Swings

How many of you have tried to hit big home runs or taken YOLO trades trying to make a lot of money?

The moment you try to hit home run trades, you're immediately putting on more risk. If you want to make ten thousand dollars, you're going to be putting on size. If you're not at that level where you can handle that risk, you're setting yourself up for disaster.

Many traders alter their size because they're "confident" about a trade. They go from risking $200 to risking $2,000 because they think this trade will work.

Traders do that because they assume this trade will only go higher, and they'll be right. The moment they start thinking they're going to be right, their risk management goes out the window, their edge goes out the window, and their game plan goes out the window.

Mistake #5: Setting Profit Goals Instead of Process Goals

This is something every trader does, especially new traders. They set profit goals: "I need to make a hundred thousand this year. I need to make twenty thousand this month."

Having profit goals in trading is dangerous because the market doesn't always present opportunities. The market gives you opportunities some days and weeks, and other times it won't. Opportunities are not consistent.

Imagine a trader sets a goal to make ten thousand this month, but the market is dead flat. Mentally, they get wired to force trades, put on size to hit their goal. This leads to overtrading, oversizing, and bad setups.

Instead, have process goals: "I want to refine my edge. I want to get better at entries and exits. I want to slowly increase my size." Focus on becoming a better trader - the money will follow naturally.

Mistake #6: Following Alerts Without Understanding

I don't have a problem with alert services, but the problem is when new traders copy alerts without understanding the move, the risk, or learning anything from it.

Number one: Most alert services don't work. There are very few people whose alerts are actually good. For most people, it's not good.

Second, when traders do get into a good alert service, they're not able to learn from it unless they ask, "Why did this person buy here? How can I replicate this?"

If you're in any services, that's fine, but look to learn the process. Learn how that person is taking trades, how they're executing, and what their thought process is. Don't just copy and hope to make money. That's not the reality of it.

Mistake #7: Not Knowing When to Step Away

You have to learn to recognize your emotions and control them.

There are times when traders get emotional - maybe they took a losing trade and want to take a revenge trade. Every time traders start feeling emotional, they have to train themselves to recognize those emotions and figure out what to do.

When traders start feeling stressed, emotional, when they want to revenge trade or up their size, they have to have the discipline to step away. A lot of traders don't know when to step away and end up digging a hole or blowing up their account.

This happens all the time. Traders will take a loss, then another, and say, "I'm not ending this day red." They keep trading until they either blow their account or get back to green.

Traders will trade so much on tilt - take a trade, take a loss, take another one, another loss, just continue entering and exiting. They don't even know what they're doing. By the time their account blows up, they're sitting there saying, "What the hell did I just do?"

It takes that moment of realization where they're like, "I just blew my entire account because I had no self-control."

Those are the things you should cut off from your trading. When things don't work, instead of overcomplicating and adding things, start taking things away. Start looking at things that aren't working.

Even in personal life, when things get chaotic, people go back to basics and ask, "What am I doing that I shouldn't be doing?" Once they start removing things one by one, their life improves drastically.

The same thing happens in trading. When traders enter a slump, they should ask, "What do I need to stop doing?" When they make this list, and follow it every time, their trading improves just by taking stuff away.

Which one of these mistakes do you struggle with most? Let me know in the comments - I read every single one.

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