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Not Taking Responsibility for Trades

Irresponsible Trading
Written by Andy

Whenever you trade contracts for difference (CFD), you must realize that you alone are responsible for your profits and your losses. Some people find it unpleasant to face up to the fact that they lost money, but one of the fundamentals of trading is to realize that losing on a trade is not ‘failing’, but an intrinsic part of the business you are pursuing.

When you are involved in the excitement of watching a particular chart, it may slip your mind that you have other open positions that should be routinely checked on to make sure that there are no surprise losses. While you should always use stop losses, and trailing stops can help safeguard open profitable positions, you need to be aware of your current situation with regard to all your orders. By frequently checking on your open positions you will know what your overall exposure to the market is and whether you are in profit or loss.

One problem can be that you have not familiarized yourself properly with the trading platform, and may inadvertently place trades or orders while you are navigating around. This is one drawback of one click trading, which in other ways is such an advantage for placing trades quickly at the price you want. Whatever the reason, this is still your responsibility and you should monitor your open trades, arranging for that window to be constantly on display. In such cases it is best to detect these mistakes as quickly as possible by monitoring your portfolio of open positions. Unfortunately, these type of mistakes are more common than you might think.

Another problem can be hitting buy instead of sell, or not realizing or correcting the size of the order, if you do not want the default size. Sometimes you can mistake the ticker symbol, and if you are not watching the response you may place trades you had not intended. For instance, the symbol for Apple Computer is AAPL, not APL which is Atlas Pipeline Partners. These are usually mistakes put down to having a ‘fat finger’. However, if you are serious about your trading, you should make sure that you exercise the appropriate level of care.

Most traders recommend that you keep a trading log which details all the trades you have entered, together with the way in which you selected them. This can be a great help in maintaining control of all the positions that you have open, particularly if you are trading in a busy market. Apart from that, it provides you with history that can allow you to improve your trading strategy by determining when you pick losers if there is any common thread. Sometimes a trader will perform better in the morning than in the afternoon, and if you have that knowledge you can take more care in selecting trades during your off-period.

With the benefit of a trading journal, you can not only face up to the fact that you have losing trades, but you can also learn from them and improve your performance over time. If you want to make a business of trading it is your responsibility to treat it as a business, to accept that mistakes do happen, losing trades do happen, but you can learn to minimize the occurrence of these to improve your trading over time. Whatever you do rememeber never to trade with money that you cannot afford to lose.

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