Iam just listing down some of the common mistakes done by traders and their belief when they jump into the concept of Trading system. These are some of my observance from the people those who jump newly into the trading system world. If you observed a lot please list ii here.
1) Iam Blindly Trading based on the Buy & Sell Signals without analyzing the risk involved in the trading system.
Anyone those who are very new to the trading system concepts got attracted towards it. These Buy and Sell arrows on the chart give them psychological confidence on the trading system to trust those signals to trade.
These Buy and Sell logic built using programming languages are just mathematical models and doesnt do any sort of prediction works. So its better to understand the nature of the trading system and the risk involved in it.
2) I follow the trading system if someone/my friends/relatives provoke me that the trading system is good because it had made them considerable amount of profits using that trading system after few trades and they advertise me that it is a very accurate trading system as they had observed few trades and followed some of the buy and sell signals from the trading system.
Most of the common people are getting attracted towards this sort of trading system. Visual testing alone is not enough as the observation of the sample size is very low and it is very tough to evaluate a trading system behavior based on visual observation alone.
3) Iam looking for a good intraday trading system which gives 75-85% accuracy. Iam even ready to pay for that. Let me know if you have.
Many website in india very recently opened shops to trap these kinds of traders as these traders are very new to trading system and they do have a lot of inner spirit to earn more or probably they would have lost more. Such traders are getting trapped because of the cacthy Charting Images/Snapshots on their websites/facebook showing Distance Buy and Sell Signal with unbelievable profits. But once you started trading based the trading system in realtime scenario you could observe that something wrong with the trading system
4) I want to make 30,000 every month. Please provide me a trading system for that?
This is a wrong practice. If you are having such a attitude you could probably lost now or might be lossing very slowly. Remember Losses are part of the trading system. View Trading system as a mathematical tool to reduce the risk and trade in a business perspective and never view trading system as a gambling factor.
5) I loose my patience & Hope whenever i see 4-5 or even more consecutive losses
4-5 consecutive losses are very common in any kind of trading system and in the worst case 10 or even more losses are common. A trading system is considered as a good trading system if it withstand the worst case scenario and making consistent returns. No Necessarily such a trading system should have a winning ratio of more than 50%.
6) I want to trade higher timeframes as it involves less noise and i dont want to trade lower timeframes as it involves lot of whipsaws.
There are certain strategies where trading in higher timeframes involves lots of risk. Assume that Supertrend accuracy is 42% in 5min charts and you might thought that 15min charts and hourly charts would have lesser noise and higher winning rate. The answer is “yes” it invovles lesser noise when compares to 5min charts but the risk factor is very higher in higher timeframes . 3-4 consecutive losses are possible in higher timeframes in such cases huge damage will be done if you are trading such a trading system in higher timeframe.So better analyze the worst case scenario of trading in such a timeframes and make sure you have the potential to withstand those losses.