Common Trading Mistakes and How to Avoid Them

Part 1: Pre-Trade Mistakes

These mistakes happen BEFORE you even enter a trade.

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Mistake #1: Trading Without a Plan

What it looks like:

Trader opens charts
"Let me see what's happening..."
Sees random price movement
"This looks like it might go up"
Enters trade with no preparation
No predetermined entry, stop, target
Making it up as they go

Why it’s deadly:

Without a plan, every decision is emotional

Emotional decisions = Account killers

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Real Example – Marcus:

Monday 9:37 AM:
Opens EUR/USD chart
Price at 1.0850
"Looks bullish to me"
Enters LONG, 0.30 lots
No stop loss set
No target defined
"I'll figure it out as it moves"

9:52 AM: Price at 1.0835 (-15 pips, -$45)
"It'll come back..."

10:15 AM: Price at 1.0820 (-30 pips, -$90)
"Just a pullback..."

10:48 AM: Price at 1.0795 (-55 pips, -$165)
Finally closes in panic

If he had plan:
- Entry: 1.0850
- Stop: 1.0830 (20 pips, -$60)
- Would have limited loss to $60 instead of $165

Cost of this mistake: $105 unnecessary loss

Over 6 months: 83 times = ~$8,715 in preventable losses

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Prevention System:

PRE-TRADE CHECKLIST (Must complete BEFORE entering):

□ Setup type identified: ___________
□ Entry price: ___________
□ Stop loss price: ___________
□ Take profit price: ___________
□ Position size calculated: ___________
□ Risk in dollars: ___________
□ Risk-reward ratio: ___________
□ Confirms my trading plan: YES / NO

If ANY box unchecked → DO NOT ENTER

Keep this checklist printed, visible, mandatory

Result after implementation:

Marcus went from 83 “no plan” trades to 3 in 3 months

Those 3 were caught and closed immediately

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Mistake #2: Trading the Wrong Session

What it looks like:

US-based trader trading EUR/USD at 11 PM EST
= Asian session
= Low liquidity
= Wide spreads
= Choppy, meaningless movement
= Stop hunting common
= Technical levels don't hold

Why it happens:

Trader available to trade at that time

But availability ≠ optimal trading time

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Real Example:

Trader: Sarah, West Coast (California)
Available: 9 PM - 12 AM Pacific (12 AM - 3 AM EST)
Pair: EUR/USD
Session: Dead zone (Asian session)

Results over 2 months:
38 trades during this time
Win rate: 39%
Average spread cost: 2.3 pips (vs 0.8 during London/NY)
Net: -$640

Same strategy during London/NY overlap:
12 trades (limited availability)
Win rate: 58%
Average spread: 0.9 pips
Net: +$380

The problem: Trading at wrong time destroyed otherwise-good strategy

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Prevention System:

SESSION RULES:

MY OPTIMAL SESSIONS (based on pairs I trade):
Primary: London/NY overlap (8 AM-12 PM EST)
Secondary: London session (3-8 AM EST)
AVOID: Asian session, Friday afternoon, Sunday open

HARD RULE:
If I can't trade during optimal sessions,
I don't trade that pair.

Alternative:
Switch to pairs active during my available time
(If only available during Asian: Trade USD/JPY, AUD/USD)

NO EXCEPTIONS to session rules

Sarah’s solution:

Changed schedule (woke up 6 AM instead of trading late night)

Traded 6-9 AM Pacific = 9 AM-12 PM EST (optimal overlap)

Same strategy, different time:

• Win rate jumped from 39% to 61%
• Net result: +$540 in 2 months

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Mistake #3: Not Checking Economic Calendar

What it looks like:

Trader: Sets up beautiful trade
EUR/USD at support, bullish pin bar
Enters LONG at 1.0850
Stop at 1.0830

8:30 AM EST: Doesn't know NFP (Non-Farm Payrolls) releases
NFP comes in TERRIBLE
EUR/USD drops from 1.0850 to 1.0720 in 30 seconds
Stop at 1.0830 gapped through
Filled at 1.0735
Loss: 115 pips instead of 20 pips planned

"What just happened?!"

Why it’s deadly:

Major news creates:

• Extreme volatility
• Wide spreads
• Gap through stops
• Unpredictable movement
• 5-10x normal risk

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Real Example – Marcus:

18 times Marcus traded without checking calendar
Average loss per news-caught trade: $280
Total cost: $5,040

All preventable with 30 seconds of checking calendar

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Prevention System:

DAILY MORNING ROUTINE (Before trading):

1. Open Forex Factory or similar calendar
2. Check for HIGH IMPACT news today
3. Note times of releases
4. Make decision:

   Option A: Close all trades 15 min before news
   Option B: Don't trade during news hours
   Option C: Accept risk and DON'T check positions during news

Never: Be in trade and not know news is coming

HIGH IMPACT EVENTS (Always check):
- NFP (First Friday, 8:30 AM EST)
- CPI (Monthly, 8:30 AM EST)
- FOMC (8 times/year, 2 PM EST)
- GDP (Quarterly, 8:30 AM EST)
- Central bank rate decisions
- Employment data

Set phone alerts for these 30 min in advance

Result:

Marcus went from 18 news-caught disasters to ZERO

Saved approximately $5,000 in preventable losses

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Mistake #4: Taking Setups That Don’t Match Your Strategy

What it looks like:

Trader's Strategy: Pin bars at support

But sees: Double top at resistance
"This looks good too..."
Enters SHORT (not his strategy)
Loses

Then sees: Breakout above range
"Don't want to miss this!"
Enters LONG (also not his strategy)  
Loses

Now has 3 different strategies:
- Pin bars at support (his actual plan)
- Double tops (random impulse)
- Breakouts (fear of missing out)

None getting enough samples to work properly
All producing random results

Why it happens:

• Boredom between setups
• FOMO (fear of missing out)
• “This looks good too” syndrome
• No discipline to wait for YOUR setup

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Real Example:

Trader: Jennifer
Strategy: RSI divergence at key levels
Setup frequency: 2-3 per week

But also took:
- 15 "random support bounces" (not part of plan)
- 12 "breakouts that looked strong" (not part of plan)
- 8 "trend continuation" (not part of plan)

Her actual strategy results (RSI divergence):
18 trades, 67% win rate, +$840

Her random trades results:
35 trades, 38% win rate, -$920

Overall: Lost money despite having winning strategy

Problem: Didn't stick to ONE strategy

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Prevention System:

STRATEGY LOCK-IN:

My Strategy: ___________________________
(Write it. Be specific.)

My Setups (Maximum 3 types):
1. _______________________________
2. _______________________________
3. _______________________________

HARD RULE:
If setup doesn't EXACTLY match one of these three,
I DO NOT TRADE IT.

No exceptions.
No "but this looks good too."
No "just this once."

Post this on your monitor:
"If it's not one of my 3 setups, I don't trade it."

Track in journal:
"Followed strategy: YES / NO"

Goal: 95%+ "YES" rate

Jennifer’s result after implementing:

Stopped taking random trades

Focused only on RSI divergence (her actual strategy)

Next 2 months:

• 23 trades (all her setup)
• 65% win rate
• +$1,240

By removing noise, her edge appeared

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Mistake #5: Wrong Position Size

What it looks like:

Trader thinks they're risking 1%
Actually risking 3.7%

How?
- Calculated wrong
- Confused lot size
- Didn't account for spread
- Used "round numbers" instead of math

Example:
$5,000 account
Wants to risk 1% = $50
Stop loss: 25 pips away

Correct position size: 0.20 lots
What trader enters: 0.30 lots ("seems right")

Actual risk: $75 (1.5% instead of 1%)
Over 10 trades: 15% risk instead of 10%

Why it’s deadly:

Small miscalculation = Large impact over time

3% risk instead of 1% = 3x faster account destruction

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Real Example – Marcus:

Marcus "eyeballed" position sizes
"I usually do 0.20-0.30 lots"

Actual risk per trade varied:
- Trade 1: 0.8% (too small)
- Trade 2: 2.3% (too large)
- Trade 3: 1.1% (close)
- Trade 4: 3.1% (way too large)

Over 6 months:
Average risk: 1.8% (vs intended 1%)
This 80% increase in risk contributed significantly to losses

On losing streaks:
- At 1% risk: 10 losses = 10% drawdown
- At 1.8% risk: 10 losses = 18% drawdown

That 8% difference nearly destroyed his account

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Prevention System:

POSITION SIZE CALCULATOR (Use EVERY trade):

Formula:
Lot Size = (Account Balance × Risk %) / (Stop Loss Pips × Pip Value)

For XXX/USD pairs:
Lot Size = (Account × Risk %) / (Stop Pips × $10)

Example:
Account: $5,000
Risk: 1% = $50
Stop: 30 pips
Lot size = $50 / (30 × $10) = $50 / $300
Wait, that's wrong. Let me recalculate:

For 0.10 lots: Pip value = $1
So: Lot size = $50 / (30 pips × $1 per 0.10 lot)
Lot size = $50 / $30 = 1.67 × 0.10 = 0.17 lots

TOOLS:
1. Position size calculator spreadsheet
2. Built-in calculator on platform
3. Online calculator (myfxbook, babypips)

RULE:
Must calculate BEFORE entering
Round DOWN for safety (0.17 → 0.15, not 0.20)
Verify actual risk after entering

Marcus’s result:

Started using calculator for EVERY trade

Risk consistency: 99% of trades within 0.9-1.1% risk

This single change improved account stability dramatically

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Part 2: During-Trade Mistakes

These mistakes happen WHILE you’re in a trade.

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Mistake #6: Moving Stop Loss to Avoid Taking Loss

This is the #1 account killer. Deserves deep dive.

What it looks like:

Entry: 1.0850 LONG
Stop: 1.0830 (20 pips, risk $20)

Price drops to 1.0835 (5 pips from stop)

Brain: "It's going to bounce! It always does this!"
"If I just give it 10 more pips of room..."
Moves stop to 1.0820 (30 pips, risk now $30)

Price drops to 1.0825

Brain: "See! It's bouncing! Good thing I moved stop!"
Moves stop to 1.0810 (40 pips, risk now $40)

Price drops to 1.0810, stop hit
Loss: $40 instead of $20

But it gets worse...

50% of time: Price drops to 1.0805
Trader moves stop AGAIN to 1.0800
Eventually loses $60-100 instead of $20

Why traders do this:

• Can’t accept being wrong
• “Hope” trade will reverse
• Already emotionally invested
• Loss aversion (brain hates realizing losses)

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Real Statistics:

Marcus moved stops 47 times over 6 months

Original planned loss: $20 average
Actual loss after moving stops: $67 average

Extra cost per moved-stop trade: $47
Total cost: 47 × $47 = $2,209

Over $2,000 lost just from moving stops!

Here’s the kicker:

In 41 of those 47 trades (87%), the original stop would have been hit anyway

Only 6 trades (13%) “benefited” from moved stop

Net result of moving stops: -$1,950

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The Brutal Truth:

When your stop is about to be hit, your analysis was WRONG.

Moving the stop doesn’t change that

It just increases the cost of being wrong

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Prevention System:

STOP LOSS COMMITMENT PROTOCOL:

BEFORE ENTERING TRADE:
1. Write down on paper: "My stop loss is: _______"
2. Say out loud: "I will NOT move this stop wider"
3. Set the stop in platform IMMEDIATELY
4. Take screenshot with stop visible

RULE:
"I can move stop to breakeven or profit ONLY
I CANNOT move stop to increase loss
EVER
No exceptions
No 'but this time is different'
No 'just 10 more pips'"

CONSEQUENCE IF BROKEN:
"If I move a stop wider, I:
- Must close trade immediately
- Take 1-week trading break
- Write 500-word journal entry on why I broke rule"

Harsh? Yes.
Necessary? Absolutely.

POST-IT NOTE ON MONITOR:
"Your stop loss is where you were WRONG.
Moving it just makes you MORE wrong."

Marcus’s result:

After implementing this:

• Moved stop wider: 2 times in 3 months (vs 47 in previous 6)
• Both times caught himself, closed immediately
• Saved approximately $2,000

This ONE change had biggest impact on his trading

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Mistake #7: Watching Every Tick

What it looks like:

Enter trade at 1.0850
Target at 1.0900 (50 pips, 2-3 hours away)

Trader sits and watches:
1.0851... 1.0849... 1.0852... 1.0848... 1.0853...

Every 1-pip movement triggers emotion:
Up 3 pips: "YES! This is working!"
Down 5 pips: "Oh no, should I close?!"
Up 7 pips: "Maybe I should take profit now?"
Down 4 pips: "I should have closed at +7!"

After 30 minutes of this torture:
Up 12 pips, trader closes from mental exhaustion
"I'll take the $12"

Price continues to 1.0900 target (+50 pips)
Trader missed $38 of profit due to watching every tick

Why it’s deadly:

Watching every tick:

• Creates emotional rollercoaster
• Triggers premature exits
• Prevents targets from being hit
• Exhausting mentally
• Leads to overtrading

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Real Example:

Trader: Alex
Strategy: Swing trading, targets 60-100 pips
Typical trade duration: 4-8 hours

But Alex watched every tick:
- Closed 67% of winning trades early (avg +18 pips vs +73 pip targets)
- This cost him $4,200 in missed profits over 6 months

When forced to walk away:
- Targets hit 89% of time
- Average win: 68 pips
- Significantly more profitable

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Prevention System:

THE "SET AND FORGET" PROTOCOL:

AFTER ENTERING TRADE:
1. Set stop loss
2. Set take profit (or alerts)
3. Take screenshot
4. CLOSE THE CHART
5. Set timer for 30-60 minutes
6. Do something else (literally anything else)

ACTIVITIES DURING TRADE:
- Work
- Exercise
- Read
- Walk
- Chores
- Anything except watching chart

CHECK TRADE ONLY:
- Every 30 minutes minimum (15-min chart traders)
- Every 1-2 hours (1H-4H chart traders)
- Once per day (daily chart traders)

PHONE AWAY:
Keep phone in another room
Disable trading app notifications
You have stops and targets set - trust them

MANTRA:
"My stop and target will do their job.
I don't need to watch.
The trade works out or it doesn't.
My watching doesn't change the outcome."

Alex’s result:

Implemented “set and forget”

Started going to gym during trades

Next 2 months:

• 78% of targets hit (vs 33% when watching)
• Average win: 64 pips (vs 18 pips)
• Also got in better shape (bonus!)

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Mistake #8: Closing Winners Too Early

What it looks like:

Enter LONG at 1.0850
Target: 1.0910 (60 pips)
Stop: 1.0820 (30 pips)
Risk:Reward = 1:2

Price moves to 1.0870 (+20 pips, $20 profit)

Fear kicks in:
"What if it reverses?!"
"$20 is better than $0!"
"Let me close now while I'm ahead!"

Closes at +20 pips

Price continues to 1.0915
Would have hit target for +60 pips ($60)
Trader left $40 on the table

Why it happens:

• Fear of giving back profits
• Lack of confidence in analysis
• “Bird in hand” mentality
• Previous experience with reversals
• Greed turning to fear

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The Math That Destroys Accounts:

Strategy designed for:
Win rate: 50%
Risk:Reward: 1:2 (risk 30 pips, gain 60 pips)

Expected value per 10 trades:
5 wins × 60 pips = +300 pips
5 losses × 30 pips = -150 pips
Net: +150 pips ✓ PROFITABLE

But trader closes winners early:
Actual: 5 wins × 20 pips = +100 pips
5 losses × 30 pips = -150 pips
Net: -50 pips ✗ LOSING MONEY

Same win rate!
Just closing early!
Strategy went from profitable to losing!

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Real Example – Marcus:

Marcus closed winners early 56 times

Average planned target: 65 pips
Average actual exit: 23 pips
Missing: 42 pips per trade

56 trades × 42 pips × $1 (avg pip value) = $2,352 missed profit

If he'd just let his targets hit:
Would have had +$2,352 more profit
Likely would have been overall profitable instead of losing

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Prevention System:

TARGET COMMITMENT PROTOCOL:

RULE 1: TARGETS ARE MANDATORY
"When I set a target, it's NOT a suggestion
It's a COMMITMENT
I WILL NOT close before target unless stop hit"

RULE 2: PARTIAL PROFITS ONLY
"If tempted to close early:
I can close 50% at psychological milestone
MUST keep 50% running to full target"

Example:
Target: 1.0910 (+60 pips)
At +30 pips (halfway), feeling nervous:
Close 50% of position (+30 pips locked in)
Keep 50% running to 1.0910 target

This satisfies fear while staying disciplined

RULE 3: JOURNAL EARLY EXITS
"Every time I close before target:
Must journal:
- Why I closed early
- What I was feeling
- Did price hit target anyway?
- How much did early exit cost me?"

After 10 early exits, review:
How many times did price hit target after I closed?
(Usually 70-80%)
How much profit did I miss?
This data PROVES early closing is mistake

PHONE REMINDER:
Set alarm for target price with message:
"DON'T CLOSE EARLY. TRUST YOUR ANALYSIS."

Marcus’s result:

Started taking 50% at halfway point, holding rest to target

Next 3 months:

• Let full 50% run to target: 84% of time
• Average win: 48 pips (vs 23 pips before)
• Recovered $1,800+ in previously-missed profits

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Mistake #9: Not Having a Stop Loss

What it looks like:

"I don't need stops, I'll just watch it"
"Stops get hunted, so I use mental stops"
"If it goes against me, I'll close manually"

Translation:
"I don't have the discipline to take losses"

What actually happens:

Enter LONG at 1.0850
No stop loss set
"I'll close if it gets bad"

Price: 1.0840 (-10 pips)
"Just a pullback, it'll come back"

Price: 1.0820 (-30 pips)
"Can't close now, that's too big a loss"

Price: 1.0800 (-50 pips)
"If I close now, it'll reverse immediately"

Price: 1.0770 (-80 pips)
"I'm in too deep, have to hold now"

Price: 1.0720 (-130 pips)
"This is a nightmare, but it HAS to bounce"

Eventually closes at -150 pips or worse

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Real Statistic:

Survey of 500 blown accounts:
"Did you use stop losses?"

Always used stops: 12% of blown accounts
Sometimes used stops: 31% of blown accounts
Never used stops: 57% of blown accounts

NOT using stops = 5x more likely to blow account

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Real Example:

Trader: Kevin
"Stop hunting is real, so I use mental stops"

Over 3 months:
Planned max loss per trade: 30 pips
Actual average loss: 94 pips

His "mental stops" became:
"I'll close at -30... wait, -40... okay -50... fine, -70..."

Eventually:
One trade: -340 pips ($340 loss on 0.10 lots)
Because "it HAD to come back eventually"
(It didn't)

This one trade wiped out 2 months of careful trading
All because no stop loss

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Prevention System:

MANDATORY STOP LOSS RULES:

RULE 1: NO TRADE WITHOUT STOP
"Before clicking 'BUY' or 'SELL':
Stop loss MUST be set in platform
Not 'I'll set it in a minute'
Not 'mental stop'
BEFORE entry, not after"

RULE 2: STOP TYPES
For normal trades: Regular stop
For overnight/weekend: Guaranteed stop (if available)
For news trading: Wider stop or no trade

RULE 3: STOP VERIFICATION
After entering:
1. Screenshot showing stop is set
2. Verify stop in platform orders tab
3. Check stop distance matches plan

RULE 4: ACCOUNT PROTECTION SETTING
If platform allows:
Set maximum loss per trade at account level
Example: "Max loss per trade: $100"
Platform won't let you risk more

This is backup in case you forget stop

CONSEQUENCE:
"If I enter trade without stop loss:
- MUST close trade immediately (take whatever loss/gain)
- 3-day trading suspension
- No exceptions"

WHY THIS WORKS:
Physical stop = No emotional decision when price against you
Mental stop = Emotions override logic 95% of time

Kevin’s result:

Forced himself to use platform stops

Next 3 months:

• Average loss: 32 pips (vs 94 pips before)
• No catastrophic losses
• Account stable and growing

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Mistake #10: Adding to Losing Positions (“Averaging Down”)

What it looks like:

Enter LONG at 1.0850 (0.10 lots)
Price drops to 1.0820 (-30 pips, -$30)

Trader thinks:
"Price is cheaper now! Better entry!"
"If I buy more here, I'll lower my average entry!"
"When it goes back up, I'll profit faster!"

Adds another 0.10 lots at 1.0820
Now has 0.20 lots, average entry 1.0835

Price drops to 1.0790 (-60 pips from avg entry)
Loss: $120 (vs $30 if hadn't added)

Price drops to 1.0750
Loss: $250

"Maybe I should add more to average down further?"
Adds 0.20 lots at 1.0750
Now has 0.40 lots, average entry 1.0800

Price drops to 1.0700
Loss: 0.40 lots × 100 pips = $400

Account destroyed by "averaging down"

Why traders do this:

• Feels logical (“buying the dip”)
• Works in investing (dollar-cost averaging)
• Desperate to avoid realizing loss
• “It HAS to reverse eventually”

Why it’s deadly in forex:

Forex can trend for LONG time

Adding to losers means:

• Larger position
• Larger losses
• No stop loss anymore
• All-or-nothing mentality
• Account blow-up risk

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Real Example:

Trader: Michelle
Added to losing positions 12 times over 3 months

11 times: Eventually broke even or small profit
(Made her think strategy worked)

1 time: EUR/USD dropped 400 pips in strong trend
She averaged down 4 times
Final position: 0.80 lots, in -320 pip loss
Loss: $2,560 (52% of her $5,000 account)

That ONE averaging-down disaster
Wiped out 3 months of profitable trading

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Prevention System:

ANTI-AVERAGING-DOWN RULES:

RULE: NEVER ADD TO LOSING POSITION
Not "just this once"
Not "but it's clearly oversold"
Not "this is different"
NEVER

If trade goes against me:
Option A: Let stop hit (take the loss)
Option B: Close early if analysis invalidated
Option C: DO NOTHING (let it play out)

NEVER Option D: Add more

WHY:
"If my analysis was right, price wouldn't be hitting my stop
If price is hitting my stop, my analysis was WRONG
Adding to wrong analysis = Bigger loss"

ALLOWED:
Adding to WINNING positions (scaling in)
But NEVER to losing positions

POST-IT NOTE:
"Averaging down = Account blow-up
One bad trade away from game over
NOT WORTH IT"

ACCOUNT RULE:
"Maximum total risk across all positions: 3%
If I want to add to position,
Must close part of existing position first
This prevents overleveraging through additions"

Michelle’s result:

Stopped averaging down completely

Next 3 months:

• Zero averaging-down trades
• No catastrophic losses
• Steady growth
• Sleeping better at night

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Part 3: Post-Trade Mistakes

These mistakes happen AFTER a trade closes.

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Mistake #11: Revenge Trading

What it looks like:

Trade 1: Stops hit, -$50 loss
Emotional state: Angry, frustrated

Brain: "The market took my money!"
"I need to make it back RIGHT NOW!"
"I'll show the market!"

Trade 2: Enters immediately (no setup)
Position size: 2x normal (to "make it back faster")
Result: Stop hit again, -$100 loss

Brain: "ARE YOU KIDDING ME?!"

Trade 3: Even larger position, worse setup
Result: -$150 loss

15 minutes, 3 revenge trades:
-$300 total (vs original -$50)

Account damage: 6x worse due to revenge trading

Why it happens:

• Ego can’t accept loss
• Market feels like “enemy”
• Desperate need to “win”
• Emotional, not rational
• Loss of discipline