Let’s just agree:
If you’re trading, you’re going to mess up.
Losses are part of the game—think of them as tuition for learning the markets. Every trader, from newbies to pros, has taken hits to get better.
But what if I could shine a light on the biggest pitfalls before you stumble into them? Imagine making fewer mistakes, losing less money, and building confidence faster because you’re aware of what to avoid. Awareness is the first step to mastery.
In this post, we’re breaking down the seven most common mistakes beginner retail traders make—mistakes I’ve made myself—and giving you practical tips to dodge them. From emotional traps to chasing bad trades, you’ll learn how to protect your account and trade smarter. Let’s dive in!
1. Letting Emotions Take Control
Emotions are a trader’s worst enemy. Fear makes you sell too soon when a trade dips. Greed or FOMO (fear of missing out) pushes you to buy when prices are sky-high. As retail traders—everyday folks with smaller accounts—we’re especially prone to these emotional swings. I’ve felt the panic of a losing trade and the rush of a spiking stock, and it’s led to some bad calls.
Big players like institutions and whales count on our emotions. They know we’ll panic-sell during dips or FOMO-buy breakouts, creating liquidity for their massive trades. Our predictable reactions are their opportunity.
My Mistake: Impatience was my emotional downfall. I’d ditch trades too early if they didn’t move fast, missing out on profits I’d planned for.
How to Avoid It: Write a trading plan for every trade—entry, exit, stop-loss—and follow it, no matter your feelings. Keep a journal to track emotional triggers. If you’re feeling impulsive, step away from the charts.
Easiest solution is to share your trades in our community on Skool: Join here. I’ve been documenting all my trades and it has been really helpful in making me stick to my strategy.
2. Chasing Breakouts into Traps
Picture a stock smashing through a resistance level with huge volume. You think, “It’s going higher!” and buy in. Then, the price reverses, leaving you stuck. This is chasing breakouts, and it’s a trap beginner retail traders fall into often. Breakouts look like opportunities, but they’re frequently setups by big players.
The market thrives on patterns—breakouts, pullbacks, retests—because human behavior is predictable. When we rush into breakouts, we push prices up just enough for whales to sell. When prices pull back to test support, we panic and sell, thinking it’s over. This buy-high, sell-low cycle is a rookie mistake.
My Mistake: I used to want to chase on green days, buying when stocks were soaring because it felt safe. But if you do this, you end up buying at peaks, only to panic sell when prices drop.
How to Avoid It: Wait for pullbacks to support levels where prices have stabilized. Use tools like moving averages or Fibonacci retracements to spot these zones. Buy when the price confirms support, not at the height of a breakout. The breakout backtest is a simple strategy to use that is very effective in bull markets.
3. Overtrading: Quantity Over Quality
Overtrading is jumping into too many trades, chasing every market move, trying to recover losses or catch every opportunity. It’s a fast track to burning out your account and your brain. Every trade carries risk, plus fees and slippage eat into your capital. Pros trade less, focusing on high-probability setups.
Overtrading often comes from impatience or emotional reactions. A loss stings, so you take another trade to “fix” it. A busy market feels like you have to trade. But more trades don’t always mean more profits—they can often mean more chances to lose.
My Mistake: During my trading challenge I have overtraded at times. It’s not a good feeling to rush a trade and it’s a reminder that opportunities will come and go. Doing nothing is sometimes the best approach.
How to Avoid It: Cap your trades at one or two per week, based on a clear strategy like support/resistance or chart patterns. Focus on quality setups. If you’re tempted to trade more, set a weekly limit and stick to it. Make a rule not to trade from your phone.
4. Ignoring Risk Management
Risk management keeps you in the game, but beginners often skip it, chasing unrealistic gains. Without it, one bad trade can crush your account. This might mean not using stop-losses, risking too much per trade, or aiming for crazy profits that don’t match the market.
Whales and institutions manage risk like hawks, but retail traders often gamble, betting big on a single trade hoping for a lucky break. When it fails, the losses are brutal.
My Mistake: I ignored risk management, risking 10% of my account on trades too early thinking I was going to miss out on a breakout. Allocating too much too early can make you miss other opportunities.
How to Avoid It: This is very strategy specific. For me I risk only 1-3% of my account per trade. Other strategies might require you to set a stop-loss to cap losses or size your positions based on your risk tolerance and stop-loss distance. Aim for steady 5-10% gains, not 100% moonshots.
My strategy states that building a position through accumulating is more powerful than trying to time the market. Accumulate at support, and keep buying the backtests. Scale in and scale out over the long-term to maximize profit.
5. Abandoning Your Trading Strategy
A trading strategy is your blueprint, but beginners often ditch it when the market gets tough. Maybe you doubt your setup at a resistance level or ignore your rules because a trade “feels” right. Without conviction in your strategy, you’re just guessing.
The market tests your resolve. Whales use news, social media hype, or price action to shake retail traders out of their plans. If you don’t stick to your strategy, you’re dancing to their tune.
My Mistake: I lacked conviction at resistance levels. I’d plan trades based on support and resistance, but when prices hit resistance, I’d bail early, missing the moves I’d targeted.
How to Avoid It: Pick a simple strategy and paper trade it to build trust. Follow your rules strictly. If you’re wavering, review your trade journal to reinforce why your strategy works. Again, document and share your trades to keep you accountable. The Skool group is great for this.
6. Buying High, Selling Low
The retail trader curse: buying when prices are high, selling when they’re low.
Green days feel safe, so we buy—often at resistance, where prices reverse. Red days feel scary, so we sell—often at support, where prices bounce. It’s the opposite of “buy low, sell high.”
This happens because we follow the crowd. Big players exploit this, buying our panic-sells and selling into our FOMO-buys. Our trades fuel their liquidity.
How to Avoid It: Think like a contrarian. If the market’s euphoric, be cautious. If it’s panicking, look for deals. Use technical analysis to find support and resistance. Buy near support, sell near resistance, and ignore the market’s mood. Trust the charts.
7. Lack of Patience and Discipline
Patience and discipline are the foundation of good trading, but beginners often lack both. We want quick wins, so we force trades when setups aren’t there. Or we abandon plans when the market tests us. The market rewards those who wait, not those who act on impulse.
My Mistake (Revisited): Impatience fueled my overtrading, chasing green days, and abandoning my strategy. I wanted profits fast, and it cost me.
How to Avoid It: Treat trading like a marathon, not a sprint. Wait for high-probability setups, even if it means days of no trades. Build discipline by tracking trades and reviewing weekly. Patience is your edge.
Conclusion: Learn from Mistakes, Trade Smarter
These seven mistakes—emotions, chasing breakouts, overtrading, ignoring risk management, abandoning your strategy, buying high, selling low, and lacking patience—are traps every beginner retail trader faces. I’ve fallen into all of them, and I’m still learning. The key is turning mistakes into lessons.
Pick one mistake to fix this week—maybe start with a trading plan or rules for your strategy to tame emotions or a trade cap to stop overtrading. Join our trading group on Skool, where you can make yourself accountable.
New to trading? Download my 6 Month Blueprint to get a roadmap on how to get started.
Trading’s tough, but it’s a skill you can build. Being aware of these mistakes will help you on your journey towards becoming profitable.
