Book Review > 20 Most Common Trading Mistakes & How You Can Avoid Them

This book is written by Kel Butcher, an Australian based trader, with excerpts included throughout the chapters from well known traders and educators such as Van Tharp, Jake Bernstein, Larry Williams, and Louise Bedford.    

The book is primarily aimed at traders, where most of these issues tend to be amplified, but the lessons can be equally well applied to investing. I found the style of the book easy to read. However, it is general in nature, so don’t expect to find any specific solutions or trading secrets within. 

The book consists of 20 chapters, with each chapter addressing a particular mistake that traders commonly make. The mistakes are general and mostly just provide a structure with which the author has attempted to cover the various aspects of trading.    The 20 mistakes covered are:

1. Defining a trading mistake
2. Jumping into the market before having learned the required skills
3. Not having a clearly defined and documented trading plan
4. Not trusting your own ability
5. Not aligning your trading strengths
6. Overcomplicating the entry process
7. Making trading too complicated
8. Not understanding money management
9. Paying good money for a dodgy trading ‘system’
10. Failing to understand the numbers
11. Misusing margin and leverage
12. Confusing time frames and trading strategies
13. Not having a clearly defined exit strategy
14. Listening to the advice of media and others
15. Averaging down
16. Lacking discipline
17. Emotive and subjective trading
18. Overtrading
19. Operational errors
20. Avoiding the paperwork

While the more seasoned traders will be familiar with the covered topics, this is probably particularly pertinent for aspiring traders, or anyone just wanting to take stock and refresh. The book gives the reader a pretty good insight into what trading is about and what you need to consider to at least give yourself a chance at surviving at it. You’ll still need to do a lot more research after reading the book, but it will provide you with a pretty good map to the areas you need to consider in more detail. 

I enjoyed reading this book. The style was easy to follow and, while the depth wasn’t particularly deep, the breadth of topics is pretty comprehensive.  I would especially recommend it to anyone relatively new to trading.

Tim Pope is a member of the AIA.