One of the most common errors is not being aware of your own limits, he told CNBC's "Trading Nation" on Thursday.
"We all think we're above-average investors, which obviously cannot be true. So we overestimate our ability to beat the crowd, and then we also overestimate our ability to tolerate risk," he explained.
When the going is good, such as in the current bull market, he says, it's easy to imagine toughing out any downturn. To avoid panic-induced decision-making in the case of a sell-off, Batnick says to have a plan for failure.
"If you were too nervous in February at the bottom when stocks were in a healthy correction … probably you owned too much stock, and if you weren't nervous then you probably could own more stocks," he explained. "Past behavior in terms of how you behave is probably a good indicator of how much risk you could take going forward."