Why Traders lose money Part-II

In Continuation with Previous Article Why Traders lose money  Part-I

Not Cutting Losing Position

One of the things that really separates professional traders from amateur is when to exit the position. Rather than “hold and hope”, disciplined traders will take the loss and get out asap. Professional traders do not chase trade but learn from the mistakes of the trade and move on.

Holding Too Many Open Positions

If you have too many option positions which you cannot manage can again lead to loss. During highly volatile move having large number of open positions lead to big loss if they go against you and trader does not get time to exit also.

Excessive Leverage

Depending on your experience level, trade leverage can be a powerful tool to help you maximize returns, or it can be the cause of your downfall. It is not something to be taken lightly and if you do not understand how it works, don’t trade until you do understand.

 

No Trading Plan

Not having a  trading plan is suicidal when you are trading in Futures. You need to have a plan for each and every trade you intend to take has these 4 things well defined.

• Entry Point
• Exit Point
• Stop Loss
• Trade Size

You should be very comfortable with your trading strategy and should not hesitate in taking profit and taking loss.