How to Overcome Common Trader Mistakes

Focus: STRATEGIES

Andrei Knight Image Andrei Knight Senior Currency Strategist, www.fxKnight.com

Andrei Knight explains several common trader mistakes and how to overcome them.

My guest today is Andrei Knight and he's been working with a lot of traders and he has an idea about the types of mistakes that newer traders make, so Andrei talk about a common mistake you're seeing these days and how are they overcoming that.

I've seen a lot of mistakes.  I think they have one thing in common and that would be context.  I think no matter which indicator you're using or which kind of system you're using, if the signal that triggers your trade doesn't fit within the bigger context, it doesn't have a lot of merit.  It might go a little bit in your favor, but the move is not going to be very sustained.  I would say it all boils down to context situational awareness.  Why are you getting into his trade?  Do you really believe the markets are going to go up?  What changed fundamentally to make them go up?  If you get a short signal, are you going to take that short signal even still expecting the market's to move up, so it's situational awareness and context.

What about a trader who says, even as a Fibonacci trader, all I need is Fibonacci.  I don't care about the news.  The context is in the chart itself.  What's your answer to that?

Which direction are you going to draw your Fib?  It comes down to context.

Alright, so which high, which low, that sort of thing.  So, even without knowing the news you've got to understand which is the important high or which it the important low.

I think so.  To a certain extent you got to know the move you're expecting.  All the technical indicators that we have out there are ways to confirm what we think is going to happen that it is happening.

Alright, and so this context where do you suggest a trader starts to get context in when you're watching Fibonacci to put context into that.  How do they do that?

Fibonacci, start with the long-term fundamentals.  I find the best way to trade Fibonacci is not so much the short little bursts, but the long-term Fibonacci movements and then everyday intraday carving out small little chunks within that move.  You could very easily within a multi-day uptrend have several good shorting opportunities on retracements, for example.