6 Trading Mistakes that Will Cost You Money and How to Avoid Them

14 Min Read
Last Updated March 27th 2021

So some of you may have already attempted to start trading, maybe you’re doing well and making good money or maybe it didn’t go as you planned and you ended up losing some or all of your money.

Whatever stage of learning how to trade you are at these are the mistakes you don’t want to make if you don’t want to lose money.

Over the years at Trading Education we have taught a lot of people just like you the skills that are required to learn to trade the financial markets whether that be day trading or long term trading.

Unfortunately, no matter how much knowledge and information we pass on, being the humans that we are. Sometimes we don’t stick to the guidelines.

Sometimes emotions may take control especially when it comes to day trading or any other type of trading.

So what are these mistakes you should avoid at all costs? We’ll get into these now, and you should know that all of these mistakes are from some of our students’ colleagues or people we’ve come across who are learning how to trade just like you.

1) Trading without any education

trading mistakes, trading without education

So what does it mean to trade without any education? In the world of online trading, we don’t like to use the word gamble or bet because the reality is if you do enough due diligence and have enough knowledge on the topic

If you plan your trade, and there is a good reason to be placing your trade then there it is not so much betting but more of taking an educated guess.

Nothing in this life is a guarantee so why would trading be any different? You have to study, you have to learn to trade, you have to put in some effort and you have to practise just like any other skill in life.

When you are learning to drive your instructor doesn’t put you in the driver seat and tell you to jump on the M25 (which is a large and busy motorway circling London) without knowing how to drive. You must first learn the skill.

More time than not if you have no knowledge of the subject whether you are learning how to trade or learning anything else for that matter if you attempt to do it before you have any knowledge at all the likely hood of you not succeeding is quite high.

On the positive side if you do decide to seek education on the topic you are increasing the odds of success in your favour. So if you have experienced this already or you know someone who has made this mistake, you should learn from your mistakes and get some education.

As you may know already if you’re one of our avid readers here at Trading Education we’re focused on providing people like you who are interested in learning how to trade, the right trading education…so if you haven’t yet mastered the skill or are just starting to learn how to trade then make sure you check out the free course options here.

You might also like: How Does an Average Person with No Experience Learn the Skills Required for Trading Forex?

2) Not having a trading plan

trading mistakes, not having a trading plan

If you have some experience of trading or you are just starting to learn how to trade then you may have heard the term “trading plan” used or even the phrase.

“Plan your trade and trade your plan”

This is not said for the sake of it, there is a reason.

Again learning how to trade is no different from learning any other skill and planning your trading is no different to planning anything else.

Just the same as you would plan your day and follow that plan in order to feel you have achieved what you set out to achieve you must look at trading in exactly the same way.

Poor planning makes for poor results or good planning can simply make things better, more consistent and reap better rewards.

Before you go on holiday, you plan it. Before you move house, you plan your move. Before you buy a new car, you plan which one you want to get, research and plan where you are going to get it from, how much is it going to cost and work out if you’re paying a good price or can get a better deal elsewhere.

So that being said, you should also plan your trades and have an overall trading plan.

What is a trading plan?  A trading plan is something that is tailored to you as an individual and if you are just learning how to trade you should really have this on top of your list, after getting an education on the topic or perhaps even before.

  • Have you got the right trading education?
  • How much money do you have to get started with?
  • Are there any particular assets you want to focus on, forex, stocks or crypto or perhaps something else?
  • How much money would you like to make from trading and is this realistic to the amount of money you have?
  • What is your risk appetite, what percentage of your account balance will you place on each trade?
  • What will you set your profit take at, so if you are making money at what point will you close your trading position and bank this profit?
  • What is your stop loss, the maximum loss you will accept from this position before you close it and take the loss and move on?
  • Do you have a daily, weekly, monthly or yearly profit target? Once you hit this will you stop?

These are some of the points you should cover in your trading plan. A trading plan is like a set of guidelines you will give to yourself and should you follow them you will always know what the best and worst possible outcomes will be from your trading. This should avoid any surprises.

You can read more about creating your own trading plan in this article.

3) Chasing Losses

trading mistakes, chasing losses

Chasing losses is probably one of the most common reasons traders and those who have decided to learn to trade lose some or all of their money.

What is considered to be chasing a loss when I am referring to trading?

Chasing a loss in trading is when you have placed a losing trade and you cannot or are unable to control your emotions.

This is where the psychological element comes into trading, one of the key things you will find when you want to learn to trade is the psychological element involved, we’ll touch more on this later.

Once you are unable to control your emotions towards a losing trade often less experienced traders will immediately place another position in the hope to make back this loss.

What’s the most likely scenario in this case?

You guessed it!  Losing another trade and more money, which is one thing you should try to keep to a minimum.

Often if you jump straight back into the market immediately after losing positions, more times than not you haven’t done the due diligence, the technical analysis and the fundamental analysis that you should be doing to justify if the trade is worth taking or not.

You can read more about technical analysis here and fundamental analysis here.


So what should you do instead?

Well, every good trader knows that you will experience some losses, no one in the world will have a 100% success rate and if they say they do you should question their honesty.

You should accept it and move on with the plan, success in trading is not about placing 100% successful trades it's about trying to make more money overall taking into consideration both your successful trades and your unsuccessful trades.

Learn to limit your losses, by using a stop loss is one way you can read more about stop losses in this article.

So to conclude on not chasing losses, one lost trade does not make you unsuccessful it comes part and parcel for anyone who wants to learn how to trade.

Take it in your stride and move on to your next trading opportunity.

4) Letting success get to your head  

trading mistakes, letting success get to your head

Now we move to the completely another end of the spectrum it’s not only losses that can affect you it’s your successful trades you also need to manage.

As mentioned earlier trading is all about psychology. As one of the most successful investors in the world to this date Warren Buffet, quite rightly said “If you cannot control your emotions you cannot control your money”

Read more about managing your emotions and the psychology of trading in this article…

So, what do we mean by not letting success get to your head?

Just as much as you will over trade or try to chase losses as we mentioned in the last point. Having a successful run can also have the same result for those learning to trade with less experience.

If you are making money and everything seems to be going well for you but your trading plan says you’ve met your profit target for the day, week or month, what should you do?

Well, if you’re on a successful streak you should continue, right? Make the most of this opportunity and keep making as much money as you can, you could even trade larger amounts of money to make higher profits!


Always stick to your trading plan just because you have made a few successful trades that doesn’t mean it’s going to continue, if you spent your day making money from smaller trading positions and having some good success then you decide to trade a larger amount.

More than what you have planned in your trading plan. Guess what happens if this big trade turns out to be unsuccessful?

You guessed it, say goodbye to all the profits you just spent your time making.

So, in conclusion, don’t let success get to your head, don’t get too big for your boots. The financial markets do not take any prisoners so you can quite easily get wiped out if you get too confident and start making bad or unplanned decisions with your trades.

See also: Stop Practicing Bad Trading Habits!

5) 100% guaranteed signals rubbish - Don’t fall for it guys!

trading mistakes, 100% guaranteed success rate signals

If you’ve taken the step to learn to trade or if you have been learning to trade for some time now you have no doubt come across individuals or companies offering you 100% guaranteed success rate signals, for a premium of course!

Well, you can’t expect to make guaranteed profits and next expect to have to pay for it can you...

Have you ever heard of the saying “If it sounds too good to be true, then it often is”?

This goes for 100% guaranteed signals, I hate to break it to you but it’s simply not possible guys and girls.

The people selling these types of services are often showing off with stacks of money, fancy cars, fancy clothes just to get your interest.

If they are able to buy all of these things then it must be working, right?

Unfortunately, we’re going to have to burst the bubble again, what if we said they’re not making money from trading to buy these things, they’re actually paying for them from the money people like you or I pay for the honour of receiving these 100% successful signals.

There’s probably only one 100% guarantee here and that’s you will lose the money you pay for the signals and you will lose money from using them.

That being said there are a number of reputable trading signals providers, they offer a professional analysis of forex, stocks or crypto and are able to offer insights into potential trading opportunities.

By no means will these be advertised as 100% successful signals and I very much doubt any of the reputable signal providers will be advertising with stacks of cash on their bed or passenger seat of their car.

So to conclude, 100% successful trading signals are not the way to go when you want to learn how to trade.

People also read: What Are the Most Popular Day Trading Strategies?

6) 100% successful automated trading - Do we need to talk about this?

trading mistakes, 100% success automated trading

I don’t think we need to talk about this one in too many details because is very similar to the previous point on the 100% successful trading signals.

Automated trading systems offer you the ability to make money with absolutely no effort at all, simply put your money in sit back and wait for the money to start rolling in.

Does this sound similar to something you’ve seen already?

Is it too good to be true?


It may be all too tempting to try one of these systems out just to see if it lives up to all the hype but I honestly wouldn’t bother wasting your time.

Even if one system does work, the market is driven by human emotion, by people and the problems with robots is they can only take technical analysis into consideration.

What about the human emotions that flow through the market, when some bad news comes up and we see some panic selling or good news breaks out and people start trading in that direction?

The chances are at some point these systems will fail and with that could come huge losses, so why to risk it. Learn to trade, learn to take opportunities as and when you can and most of all have patience, good things take time.

Stop looking for get-rich-quick schemes, they don’t work.

People get rich from working hard, working smart, having patience and a willingness to learn. That has always been the way and will continue to be the way to succeed especially when it comes to learning how to trade.

We will be adding to these articles over time to make sure you have a clear picture of exactly what you shouldn’t be doing and hopefully guide you on a path to the successful trading experience.

Don't miss: Is It Really Worth Becoming a Forex Trader?

If you enjoyed reading this, please make sure to share it on Facebook or send it to others who may be of interested and give it a like.

Also, we would like to hear about your own mistakes or things you know others have done that you think people should avoid. Let us know by commenting below.

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