Learn From Your Mistakes

Show me a trader (or spread bettor) who has never made a mistake, and I'll show you a liar or a superhuman investor. Mistakes are a part of life, and there's very little we can do about them. Whether it's clicking the wrong button within your trading account, selling a little too early or trading a bit too heavily, you too will make mistakes in the process of your trading career, and they may even cost you money. But mistakes shouldn't necessarily be viewed as a bad thing, and in fact many of the world's most successful spread bettors can point to seminal mistakes in their trading careers that pointed out a flaw in their style, or provided them with a valuable lesson and experience points that stayed with them for years to come.

The trick with making mistakes in spread betting is to realise when you've made a mistake, to realise why you've made a mistake, and to learn from that mistake. If every trading mistake was viewed as a lesson learned, we would see fewer horror stories about traders being bankrupted after unsuccessful spread betting endeavours, and with such simple remedial action, it's a shame that more traders don't take mistakes on board and learn the errors of their ways.

Knowing when you've made a mistake

Mistakes happen in spread betting, but being able to identify them can help ensure you don't consistently fall into the same traps. Mistakes can be made on both the positive and negative sides - manifest in either cutting a profit too early, or hogging a loss for too long. Indeed, some entire transactions can even be deemed mistakes, and it doesn't necessarily have to cost you money to be an error you can learn from.

Try to constantly think about your reasons for making trading decisions. Why are you entering a position? Why are you closing? Why are you holding? You must always have an answer for the question of 'why?', and if that answer turns out to be incorrect, you've made a mistake. Sometimes these mistakes might turn out to be lucky escapes in which you win a bit of money, but for different reasons to those which you thought - nevertheless, by figuring out 'why', and learning from your errors, you can help shape your thought processes to become a more refined, accomplished trader.

Keep a log

One of the best things you can do is to keep a notebook beside your trading desk, and make a note of every losing position you take. Write down every unsuccessful trade you've made, the figures involved and a reason that trade failed. Sometimes it might be a misreading of the research, sometimes you might have waited too long to offload a position, and sometimes it might just be a dose of bad luck.

While not every negative trade is necessarily the result of a mistake, analysing and recording your decisions like this can work wonders when it comes to making future trading decisions. The act of mulling over your previous thought processes and seeing their results will, over time, help modify your understanding of how the markets work, how prices respond to certain triggers, and how you should best approach decisions in future. This should help ensure you don't fall into the same trap many times over, and should hopefully in the end improve your trading success rate.