Chasing the price - why you are losing

One of the most common mistakes traders make is FOMO - fear of missing out on an opportunity. Imagine that the shares of company ABC are just rising. You buy them for 100 PLN, but due to slippage, the transaction price ends up at 102 PLN. Right from the start, you have a 2% loss. Another mistake is poor risk management. You set a profit target at 5%, but you set a stop-loss that is too tight. The market makes a slight move against you, and the stop-loss at 98 PLN gets triggered. Instead of gaining, you lose another 2%. Yet another problem is ignoring spreads - the difference between the buying and selling price. With a large spread, even if the price rises in your favor, part of the profit will be 'eaten away.'

The basic mechanism that causes these problems is emotional decision-making. FOMO makes you make decisions too quickly, without full analysis. Then, as a result of slippage or a poorly set stop-loss, your plans do not materialize as expected. Ignoring spreads, on the other hand, reduces potential profits because even minimal market movements become costly. All of this leads to a worse risk-to-reward ratio (R:R), which in the long run decreases the profitability of your investments.

Assume you have a capital of 15,000 PLN. If, due to FOMO, you make 10 trades a month and each generates a 2% loss at the start, you lose 300 PLN monthly just from price slippage. Add to this losses due to tight stop-losses, which are 2% each, resulting in an additional 150 PLN loss from 5 realized cases. Over the course of a month, these mistakes can cost you 450 PLN, which equals 3% of your capital. In the long run, such an approach is unsustainable.

To minimize FOMO, plan your market entries in advance. Analyze support and resistance levels and wait for confirmation of the signal. In risk management, follow the 1-2% capital rule. Do not risk more than 1-2% of your capital on a single trade. When setting a stop-loss, take market volatility into account. Avoid price slippage by using limit orders instead of market orders. Finally, monitor spreads by trading during the hours of highest market liquidity.

Every day, analyze your trades, noting what went well and what went wrong.