While traditional investment trends change over time, the trials and tribulations of a day trader can change in a split second. The attractions of identifying short-term trades and banking constant profits are relatively easy to appreciate. However, there are several common mistakes made by modern-day day traders.


Mistake 1: Lack of Proper Education and Preparation


The Internet has changed how we look at investment markets and the information available, even giving us ways to train before going "live". This ensures that by the time we are trading with "real money", we know the market terminology, the best trading platforms and have a primary and growing understanding of investment trends. The moment you think you know better than the market is probably the start of your demise, a reluctance to recognise your mistakes and take them on the chin.


Mistake 2: Ignoring Risk Management


Unfortunately, many of us have fallen into the trap of that next trade, the one with "huge potential" but little in the way of risk, a no-brainer. The reality is that without risk, there is no reward; without significant risk, there is no significant reward; it's as simple as that. Risk management should be central to all of your trades, setting stop-loss orders and managing the degree of leverage to control losses. Leverage is perfect on the upside but can decimate your funds on the downside!


Mistake 3: Overtrading


Do you ever feel the need to jump from one trade to the next in a split second? Are you uncomfortable holding your funds on deposit? Do you struggle to recognise the need to step back and reset?


Overtrading can be a considerable problem for undisciplined day traders, the need to constantly trade when in reality, it should be quality over quantity. This can be done by limiting your daily turnover and introducing a gap between closing one trade and opening another. In other words, common sense!


Mistake 4: Chasing Losses


All investors feel a sense of disappointment having to take a loss on a trade. One of the day trader's main challenges is the ability to put losses to one side and focus on the next trade. If your main goal becomes "making up losses", this can be dangerous, leading you to overtrade and maybe even consider trades generally outside your investment strategy remit.


As a day trader, you need to appreciate that losses will happen occasionally; some may even be significant. The key to a long-term career as a day trader is the ability to cut your losses, move on and not give them a second thought. Periodically, review your trading history and try to identify mistakes you made and some of your better decisions. Any day trader will tell you that you learn more from your mistakes than your successes!


Mistake 5: Emotional Trading


There is a common misconception regarding "emotional trading" as a day trader. The concept of a "gut feeling" - which comes with experience - is very different to dealing on raw emotion. When you lose control of your emotions, letting them dictate your trading patterns, it is time to take a step back and start again. Fear, greed or what many describe as FOMO (fear of missing out) can decimate a successful day trading career.


Other issues to consider


Aside from the above common mistakes of day traders, there are other issues to consider, such as:-


· Lack of a trading plan

· Not adapting to market conditions

· Overreliance on tips

· Following like sheep


Whether your investment horizon is counted in hours, days or years, the moment that you stop learning is the moment your career starts going backwards.




The life and times of a day trader can be challenging, but there are some fundamental strategies on which you should focus. Akin to a game of poker (a game of skill not chance), you've got to "know when to hold them, know when to fold them, know when to walk away and know when to run".

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