Stock Trading Mistakes
Avoid the Biggest Stock Trading Mistakes
By Carl G. Robertts
There are some big stock trading mistakes that you may or may not know about. Knowing about these ahead of time can save you a lot of time, money, and grief.
Photo: tradingcritic.com
Mistake #1 - Trading with money that you can’t afford to lose
This is much more common than you might expect. This could easily fall into the category of trading out of desperation. I also refer to this as trading with "scared money".
Mistake #2 - Trading Without A Well-Thought-Out Stock Trading Plan
Would you expect to start any business without a plan? You wouldn’t if you wanted to be successful. Successful stock trading requires creating, maintaining, and following through on your trading plan. I have seen people who have spent more time deciding what they were going to have for lunch than they did planning their next stock trade. Please keep in mind that "shooting from the hip" is not a successful stock trading strategy.
Mistake #3 - Having Unrealistic Expectations
Unrealistic expectations causes a great deal of frustration for beginning traders. The hyped-up returns on some stock trading websites make successful trading look like child’s play. The lure of the advertised astronomical rates of return can leave anyone daydreaming about raking in millions of dollars with little to no effort.
Mistake #4 - Not Understanding The Risk Involved
When you are just starting out it’s easy to concentrate on the potential returns from successful stock trading and not pay much attention to the risk. Please keep in mind that the risks in stock trading are real.
Let’s face it, you are going to have losing trades. In fact, at times you are going to have strings of losing trades. This is a natural part of the trading business and even the most successful traders on the planet have losing trades.
The smart thing to do is to assess your risk ahead of time for each and every trade that you take. Trade only if the trade passes the test and meets your risk profile requirements.
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