This year marks my 12th year in trading, with many highlights and countless pitfalls along the way. In fact, trading is much like driving on the road, where you encounter numerous potholes and manhole covers. The first time, you might not pay attention and fall right into the trap, but as you pass by more often, you inevitably develop skillful ways to avoid them, and your driving becomes increasingly steady.

So when we still have unknowns in trading, it's better to drive a little slower and more steadily, rather than speeding, because the faster you go, the stronger the impact when you hit a pit.

Today, I'd like to share some of the pitfalls I've encountered in my trading experience, which includes a lot of my thoughts on human nature. I hope this can serve as a navigation for your trading, helping you to avoid some of these pitfalls.

1. Believing that you can definitely make money in trading.

Many people get into trading because they see others making money. For example, they see colleagues making money from stocks, others quickly making money from forex, and they rush to join in. They think futures trading is prestigious and quickly get involved.

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Then, once they enter trading, they find themselves constantly torn between losses and profits, continuously exploring new techniques and learning other people's trading methods. As a result, they become confused, muddle through, and end up losing more and more.

In reality, when everyone starts trading, they have high expectations for themselves, thinking that if others can make money, they definitely can too. This is a very dangerous mindset.Trading is much like doing business; you need to have a holistic mindset, understanding what to buy and sell, when to buy and sell, how much to buy and sell, what to do during the off-season, whether you can cover the losses of the off-season during the peak season, and whether you can make a profit at the end of the year. You might even lay out the business plan and expected earnings for the next year in the first one or two years.

However, many people, once they enter trading, first think about how to make money without losing any. Where in the world can you find such a good business?

Therefore, in trading, risk always comes first. Knowing how much risk you can bear allows you to deduce how much money you can make. For example, if you are already in pain when you lose 30%, how can you expect to make a 200% profit?

Risk and profit are always proportional. Never give yourself the expectation that you can definitely make money. Gradually increasing your mindset from small losses to no losses, and from small profits to large profits, is the right trading process.

2. They like to find reasons for every trading action.

For example, in a trade, there is an order that should have been stopped, but you didn't, and as a result, you were trapped deeply, cutting a large piece of flesh, and you were in great pain.

But you comfort yourself internally, saying it's okay, it will definitely rise back, historical trends have always been like this, and as long as I hold on to the position, I will definitely be able to make it back.

The result is often a one-way trend that doesn't look back, until the position is blown out.For instance, when you spot a seemingly great trading opportunity on the market, you can't help but place an order, encouraging yourself by thinking, "What a fantastic trading opportunity, and I've spotted it again! Not taking it would be a waste."

However, when the market moves against you, you're unsure whether to cut your losses, and then you notice a trading opportunity that suits your strategy, but you've already used up your capital. As a result, you end up with more losses than gains, leaving you in a state of frustration and helplessness.

Take another scenario where you had set a profit target of 15 points, but when it reaches 8 points, you start to feel uneasy and fearful that the market might reverse. You end up taking profits early, comforting yourself with the thought, "At least I've secured the money in my pocket."

Then, the market goes on to make a 30-point profit, and it even shows a trend of skyrocketing, leaving you with a deep sense of regret, as you're too hesitant to enter at a higher position, causing immense distress.

These kinds of situations are quite common. Most traders accept the market's baptism in a state of regret, but each time they trade again, they find countless reasons for themselves.

Therefore, admitting mistakes and cutting losses are significant lessons in trading and life. Only when you genuinely feel that you are wrong and stop making excuses for yourself can you reflect on the pain and truly correct your trading habits. This requires a certain amount of time and practice to achieve, but it is an essential path in trading.

3. Believing that technical indicators are invincible.

Many people, after starting to learn about trading techniques, come across technical indicators. With a vast array of types and approaches to trading techniques, many tend to mystify and almost sanctify their trading methods.

In my early days of trading, I was no different, convinced that there must be a magical indicator that could accurately predict the future and make me an unlimited amount of money. If I hadn't found it yet, it was only because I hadn't looked hard enough.

Many long-term traders go through this phase because, having experienced losses, they need a belief to support them and keep moving forward.However, indicators are just ordinary tools, and there is not much difference between one indicator and another; they all interpret price fluctuations. The use of indicators is merely to serve as a standard for you to judge the market conditions, such as entering the market when certain indicator patterns are met, what to do if you lose, what to do if you profit, and how much profit is needed to cover the losses and make money, etc. This is the role of indicators.

Some people treat indicators like the needle on a compass, as if they are pointing towards the direction of profit, yet they do not accept the fact that they may fail. However, indicators are not invincible; they will probabilistically fail from time to time. We will still occasionally encounter losses, but as long as our overall profits outweigh the losses, our trading is considered successful.

Thus, indicators do not possess predictive abilities; their function is to define standards.

4. Believing that trading can consistently earn a fixed amount of money every day.

A friend asked me, "Brother Ba, the foreign exchange and gold markets fluctuate by four to five hundred points a day. My requirement is not high; I just want to earn 10 points a day, is that possible?"

It seems like a simple request with a low expectation, and it doesn't seem like a difficult task. However, those who have experienced a large number of actual trades will have a deep understanding because trading does not exist with stability.

The returns from trading must have a significant degree of uncertainty because they depend on market fluctuations and are not subject to one's will. Sometimes you might earn a month's worth of money in a day, or you might lose two weeks' worth of money in a day. The mindset of consistently earning 10 points a day is the mindset of a worker seeking stability and security, which is not applicable to the financial market.

For example, it may seem that with fluctuations of four to five hundred points, earning 10 points is not a big goal. But if you start the day by making two wrong trades and have already lost 50 points, to earn 10 points, you would need to earn a total of 60 points.But the market has already moved on, and your goal hasn't been achieved yet. What should you do then? Force yourself to trade other instruments? That's not scientific and could lead to even greater losses.

If you encounter a good trading opportunity and could potentially see a profit of 1000 pips, but you take profit at just 10 pips, that's also unscientific and a waste of the market movement.

So there is no certainty in trading, and it's impossible to guarantee that you can make money every day. If you prefer this kind of stability, it's better to consider going to work.

5. Believing that trading offers stable high profits.

Many people, when promoting their trading strategies, will release some information, such as having multiplied their capital by 5, 10, or even 20 times, which makes people itch with envy.

I once had such a highlight moment, turning 3,000 USD into over 40,000 USD within a week, a 15-fold increase.

At that time, I felt like my life was about to take off, and I thought I could achieve financial freedom through trading. I increased my positions more and more heavily until I blew up my account in the following days, not only losing all the profits but also all the additional capital I had put in.

I never deny that there can be huge profits in trading, but after so many years of trading, I have indeed never met anyone who can achieve stable high profits.

Because high profits imply extremely heavy positions, you are hanging in the air with all your heart and soul. You not only need to be right once, but you may also need to keep being right, which implies a great deal of gambling. Basically, it's a case of win or perish.

Under such great stimulation, no one can maintain their moral bottom line, and there is basically no so-called self-control. It's all about being led by the market and human nature, and all the profits are essentially attributed to luck.Many people can flaunt high profits, and I can also take a segment to show off, but when looking at the long term, it's like walking on the ends of a tightrope; either you make a fortune or you lose everything. In the long run, the outcome is always to lose everything, without exception.

Although this fact is harsh, such is the reality, and one must submit to the market trends.

6. A fondness for communication groups.

Communication groups are a great place, where you can find like-minded individuals who can alleviate the loneliness of trading alone, as if finding a homely harbor, with mutual understanding and encouragement.

However, the topics discussed in communication groups are very diverse, such as technical analysis, price points, market trends, orders, cursing at market makers, or people in the group bickering with each other, always creating a lively atmosphere.

In reality, while communication groups seem to expose you to more traders and more trading methods, they also greatly interfere with the trading process itself.

For example, you might have been bullish, but due to someone else's bearish comment, you become indecisive and end up missing out on profits.

Seeing others constantly flaunting their winning trades while you are incurring losses can be extremely frustrating, even leading to the idea of following their trades.

Observing others arguing, you start analyzing and taking sides, or even joining in, and before you know it, a noisy day has passed.

Under these circumstances, how can one trade well?People in the group come from all corners of the world, and everyone has different trading logic and cycles. Those who give you advice may not necessarily be more skilled than you; they could just be self-proclaimed experts whose mutual learning may not be very meaningful.

Moreover, there are times when the direction of effort is clearly wrong, yet everyone encourages each other, leading to a deeper entrenchment in the wrong path.

Additionally, people are naturally inclined to seek benefits and avoid harm. They like to show off when they make profits but hide their losses, which can create an illusion that someone is consistently profitable and very impressive, when in reality, this may not be the case.

In the group, there is also the possibility of lurking shills. They could be involved in scam schemes or capital games, quietly waiting for the right moment, observing who has more emotional fluctuations and who is easier to target, then gradually luring you into their trap. Such situations are quite common.

Therefore, sometimes being in a group is not a good thing. In a collective, many times one may forcibly lower their intelligence to conform to the group, seeking that so-called sense of belonging, which is of no help to trading.

7. Liking to imitate the operations of trading gurus.

Many people analyze well-known trading gurus in the market, looking for clues in their actions, analyzing the trends they have traded, and the strategies they have used, digging bit by bit, and then imitating them.

In the end, they find that they still cannot make a profit. Is this guru a fake?

Many of the god-like operations in the market are indeed worth learning from. Their thought processes, techniques, and the steadiness of their operations are all aspects worth studying.

However, trading is a very detailed matter, and everyone will have their own trading habits, leading to the fact that everyone's trading system is different, with subtle differences. A minor difference could lead to a significant difference in the final execution results.Just as I used to analyze and emulate the trading systems in "The Turtle Trading System," I found that those trading strategies were not suitable for me because they were too crude and the standards were not clear. As a result, the trading outcomes would still be altered by my subjective thinking.

In fact, a trading system is a very personalized thing. It adapts to your trading rhythm, habits, fits your personality, and knows your limits, much like a weapon tailor-made for oneself, which is not easy to use for others.

So when you see trading gurus, don't always think about copying their homework. You can learn from their systematic trading logic, overall thinking, and perspective on trading, and then adjust your own trading strategy accordingly. That is the right path.

8. Love to optimize, optimize, and optimize again.

A friend once told me that he could achieve a return of about 20% to 30% annually and asked me how he could further optimize his winning rate to take his profits to the next level.

I said, the winning rate and the risk-reward ratio are inversely proportional. If you increase your winning rate, the risk-reward ratio will decrease, which means the profit per trade will be reduced, and the final outcome may not change significantly.

He asked again, is there any way to further optimize my trading system? I always feel it's not good enough.

I've noticed that many people are anxious in trading, wanting a high risk-reward ratio, a high winning rate, and high profits, with no highest, only higher.

But as adults, we must understand a principle: everything we do comes at a certain cost, and there is no such thing as a free lunch.

If you want to pursue a high winning rate, then the profit from each order will inevitably decrease.If you aim for a high profit-to-loss ratio, then when you make a profit, it will be substantial, but the number of losing trades will also increase.

If you seek high profitability, then you must be willing to take the risk of potentially losing all your capital; whether you can handle that is the question.

So, do not be overly greedy, nor excessively optimize your trading strategy, as it is highly likely to disrupt your original trading rhythm, causing you to miss out on profits that could have been grasped.

If you are already comfortably and effortlessly making profits within a trading range, do not challenge higher difficulties. It is better to trade more varieties and increase your volume, rather than over-optimizing.

In fact, there are many pitfalls in trading, and I have extracted these from my thoughts as a lightning rod for you.

However, no matter when or where, never give up thinking about yourself, about trading, about life. It is the most terrifying thing to dive in headfirst without any regard for anything else.

I hope everyone can avoid the pitfalls and trade smoothly and successfully.