Common Trading Mistakes: Size Ends Accounts
The most common trading mistakes can be ranked by damage rather than by frequency, and position size is the only one that reliably ends an account. The others cost money steadily over time, which is a different problem with a different set of fixes.
How it works
Ranked by damage rather than by how often they appear in lists, one mistake is in a category of its own. Position size ends accounts. The rest cost money, sometimes a great deal of it, over time.
And size makes every other rule unenforceable. A position large enough to be frightening is one whose stop gets moved, whose target gets abandoned, and whose plan gets renegotiated — so oversizing does not just add risk, it disables the controls.
The exit mistakes
Trading without a stop hands the size of the loss to the market. It works indefinitely until the one occasion it does not, and the occasion it does not is unbounded.
Moving one is the same mistake with an extra step. The position was sized against a distance that no longer applies, so the actual risk is now unknown — and the decision to widen it was made under exactly the pressure the stop existed to remove.
Averaging down is oversizing arrived at gradually. Each addition improves the average price and increases the position, so the account’s exposure grows as the thesis weakens. It works most of the time, which is what makes it dangerous.
The quiet ones
Overtrading does not produce a memorable day. It removes a percentage every month through costs, and because no single trade caused it, nothing prompts an investigation.
Not keeping a record is the mistake that prevents fixing the others. Unrecorded, every mistake becomes a memory shaped by whether the trade worked, and the ones that worked stop being mistakes.
Changing method after a losing run guarantees never finding out whether anything works. Twenty trades is not enough to distinguish an edge from noise, and switching at that point starts a new twenty. Repeat for two years and the sample is still twenty.
In practice
Trading thin hours is a cost mistake rather than an analysis one. Small bars, wide spreads, and a fixed round trip that consumes a much larger share of the available move.
Short horizons are harder, not easier. More decisions, more costs, tighter stops hit more often, and less time for an edge to express itself — while the marketing points the other way.
Holding overnight at intraday size is a specific and avoidable error. A gap ignores the stop, so overnight positions need their own sizing decision.
Ignoring costs is the arithmetic mistake. Every round trip pays the spread and any commission, and on a quiet bar that fixed toll can swallow most of the move — a hurdle that exists before any question of skill.
And the belief underneath several of the others is that effort is compensated. More hours, more charts, more indicators, more trades. The market pays for position and timing, and it is indifferent to how much work went into either.
Two more belong on the list and both are about time rather than money. The first is trading a market during hours you cannot actually watch it, which converts every position into an overnight one whether or not that was intended. The second is starting a method and abandoning it inside a month, which is the sample-size mistake wearing different clothes.
And there is a mistake that only appears in hindsight: succeeding by breaking a rule. A trade taken against the plan that makes money teaches the wrong lesson twice over — it rewards the behavior and it removes the evidence, because a profitable outcome rarely gets reviewed. Grading process separately from result is the only mechanism that catches it, and it is the reason a review needs two columns rather than one.
What this list is not
It is not ordered by frequency. It is ordered by damage.
It is not exhaustive. It is the set that recurs across most accounts.
It is not a list of psychological failings. Most of them have design fixes.
And it is not a substitute for an edge. Avoiding every mistake in a method that does not work produces a slower loss.
How this connects
The fatal mistake has a formal name: risk of ruin. Oversizing raises the chance that an ordinary losing streak ends the account, and leverage reaches the same place faster by turning small moves into large ones.
Averaging down is the mirror image of scaling in. Adding to a position that is working grows exposure with the evidence; adding to one that is failing grows it against the evidence, which is the logic behind the anti-martingale approach.
Moving a stop has a legitimate cousin in the trailing stop, which only ever moves in the trade’s favor and is set by rule before entry.
Closing winners too early is the other exit mistake. A take profit level written into the trading plan stops fear from ending the trade at the first wobble.
Costs are larger than commissions. Trading fees, the bid-ask spread and slippage on a market order in a thin hour all come out before the result does.
Abandoning a method early usually means expectancy was never measured. A win rate says little until it is weighed against the size of the average win and the average loss.
And the record-keeping fix is a trading journal, read through in a regular trade review, with new methods run through paper trading first so a drawdown teaches something without costing money.
When it fails
A range produces most of them simultaneously. Setups fail repeatedly, so frequency rises, stops get moved, size increases to recover, and the method gets abandoned — all in the same fortnight, all caused by a regime rather than by the trader.
The second failure is treating them as a checklist. They interact: size causes stop-moving, which causes losses, which cause revenge trading, which causes overtrading. Fixing size upstream removes several of them at once.
A third is fixing the visible ones and not the quiet ones. Nobody boasts about their commission bill, and for an active trader it is frequently the largest line.
A fourth is expecting to eliminate them. The measurable goal is a falling count, not a zero.
And a fifth is reading a list like this instead of counting your own. The general list is a starting point; your log is the version that applies to you.
The original data
Of the 24,971 trading and investing videos measured for this site, 11 have “common trading mistakes” in the title, from 11 channels, at a median of 19,200 views.
The question: The position is twice planned and winning. Reduce?
Most of the list can be explained without reference to psychology. Costs are fixed and frequency is a choice; a hypothetical round trip of 5 cents is 5% of a one-dollar move and a quarter of a 20-cent one, so the same cost that is trivial on an active day dominates a quiet one. A trader who sizes small, trades the active hours, and counts their trades against a plan has removed the mechanical causes of most of these mistakes — which leaves the genuinely psychological ones, and there are fewer of those than the literature suggests.
Related
Risk per trade is the fix for the fatal one. Discipline covers the design changes behind most of the others. And why traders lose money is the wider version of this question.
If one lesson matters most, it is about size, not analysis. Accounts are usually damaged badly by a position that was too large, and accounts that survive a bad stretch survive because the positions were small enough to be boring.
— Michael Whitman
This page is educational, not financial advice. Test every idea on your own charts before risking money.