Tips to Avoid Big & Costly Trading Mistakes

One of the best things you can do to avoid failure and significant losses is to thoroughly practice trading over a large number of days. Take advantage of the paper trading (sim) account provided by your platform. Trade for thirty days or more so you experience a diverse set of conditions. Imagine that you’re trading with real money using a budget that is realistic for you.

In some platforms, like NinjaTrader, you can customize the total amount of “play money” you’re paper trading with. By default, NinjaTrader uses a default cash amount of $100,000 for its Sim101 practice account. You can reset this by going to the NinjaTrader Control Center > Click the Accounts tab (look at the bottom) > right-click the Sim101 account > Edit Account > modify or reset the account.

After you are done practicing for 30 days or more, consider generating a performance report. Do this via the NinjaTrader Control Center > New > Trading Performance > specify a date range for the report and click Generate. The fields will populate with your win/loss/performance data. Keep in mind that true live trading with real money can still differ, but this type of paper trading is about as close as you can get to the real thing without risking real money.

As you place trades, you’ll probably notice order text piling up near candles. This text is often obstructive. To remove the text, right-click the chart > Data Series > in the right panel, scroll all the way down to Plot executions and select the option to not plot. Click OK and all order text should be removed from the chart.

In video above, you’ll see a 2.5 point Trade Scalper winner. The Trade Scalper is one of the DayTradeToWin trading systems that focuses on scalping; a type of trading that uses a fast, in-and-out approach. A win of 2.5 points equates to $125 (before any broker or exchange fees) when trading with one futures contract. If you trade five contracts, for example, the win becomes $625. How is that computed? Well, each point of the E-mini is worth $50. Each tick is worth $12.50. Yes, there are four ticks in one point. Therefore, we can take the 2.5 points and divide that by .25 to determine the amount of ticks and then multiply that value by $12.50. This is $125. Multiply that by five and you’ll get the $625. Again, no broker or exchange fees are applied in this math.

From our experience, timing is crucial when applying day trading strategies. If you are too early or too late to place a trade, the market may have moved away. You may have to wait until conditions become more favorable or your system produces another signal. Most of the DayTradeToWin methods require action soon after a price action pattern occurs, which often ends with a closing candle/bar. As soon as that candle/bar closes, it’s time to place a trade according to the rules. This is where the ATR (Average True Range) comes into play. The ATR helps keep the risk level realistic compared to recent volatility. If the market is too slow, it doesn’t make sense to keep an open position for a long period of time in hopes that the market will awake and proceed in your favor. The inverse is also true (when markets are fast and tight profits or stops can get you out too early).

Another important idea is to avoid being greedy. It’s tempting to chase price into unknown territory in order to make up for the day’s losses. This is often a mistake. We have found it to be better to simply stop trading for the day after multiple losses occur. Some days are difficult to trade for a number of reasons and it’s not your fault. Check your finances. Consider looking for more opportunities in the future.