Posts Tagged ‘Trading Mistakes

27
Jan
08

Common trading Mistakes

MISTAKE ONE: Lack of Knowledge and No Plan

It amazes that some people expect to trade the stock market successfully without any effort. Yet if they want to take up golf, for example, they will happily take some lessons or at least read a book before heading out onto the course.

The stock market is not the place for the ill informed. But learning what you need is straightforward – you just need someone to show you the way.

MISTAKE TWO: Unrealistic Expectations

Many novice traders expect to make a gazillion dollars by next Friday. Or they start to write out their resignation letter before they have even placed their first trade!

The stock market can be a great way to replace your current income and for creating wealth but it does require time. Not a lot, but some.

MISTAKE THREE: Listening to Others

When traders first start out they often feel like they know nothing and that everyone else has the answers. So they listen to all the news reports and so called “experts” and get totally confused.
And they take “tips” from their buddy, who got it from some cab driver…

MISTAKE FOUR: Getting in the Way

By this we mean letting your ego or your emotions get in the way of doing what you know you need to do.
When you first start to trade it is very difficult to control your emotions. Fear and greed can be overwhelming. Lack of discipline; lack of patience and over confidence are just some of the other problems that we all face.

It is critical you understand how to control this side of trading.

MISTAKE FIVE: Poor Money Management

It never ceases to amaze us how many traders don’t understand the critical nature of money management and the related area of risk management.
This is a critical aspect of trading. If you don’t get this right you not only won’t be successful, you won’t survive!

MISTAKE SIX: Only Trading Market in One Direction

Most new traders only learn how to trade a rising market. And very few traders know really good strategies for trading in a falling market.
If you don’t learn to trade “both” sides of the market, you are drastically limiting the number of trades you can take. And this limits the amount of money you can make.

MISTAKE SEVEN: Overtrading

Most traders new to trading feel they have to be in the market all the time to make any real money. And they see trading opportunities when they’re not even there.

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