We are all human. Well, emotions will always derive us—especially when it comes to fear or greed. That’s why any stock trader will memorize cart pattern until his/her face is blue. These are emotions that drive human tactics. So, if you want to have any chance with stock trading, you need to get your tactics right. You need to master the rules. You need to up your stock trading skills. You don’t have an option. Mastering the game dynamics is mandatory. Remember, stock trading is a game of numbers. And anything can happen. From losses to profits—stock trading is not an obvious endeavor. Skills, knowledge, strategies, focus, rules, and dripline plays a key role when it comes to making huge profits.
Besides learning how to do it right, you also need to know the mistakes to avoid. With that in mind, here are the mistakes you should steer clear of if you want to become a pro trader.
Don’t Buy Any Stock without an Elaborate Plan
Don’t expect stock prices to shoot up as soon as you enter the trade. It’s an illusion that can lead you to huge losses and disappointments. In reality, this doesn’t happen easily. It takes patience. Plus, going into a trade with this mindset will plunge you to problems. For instance, if a trade starts moving to the worst, emotions will take over you. The tragedy is that you will find yourself putting all your cash into a trade hoping that it will rise in the next minute. This is a bad habit that’s likely to strain you emotionally.
Imagine this scenario. You have entered into a trade in a rush. Then you realize that the stocks are decreasing sharply. With your mind run by emotions, you refuse to sell the stock and take the loss. You keep holding on to them hoping for the prices to go up. Unfortunately, the prices continue declining. The end product is huge losses and immense frustrations. So, don’t pursue this route. Buy your stocks with a concrete plan.
Don’t Short Your Hurriedly. Don’t Get Demolished Too Easily on Your Shorts
Anything that goes up it must come down. That’s a fact. The same applies to stocks. Don’t be misled by those stocks that have been pumped up by scammers. They will come down. And if you dare trade them, you will have yourself to blame. Scam promoters will pump up these stocks and lure you into making the trade—something that might frustrate you. Don’t be in a rush to sell your short stock.
Don’t forget to Cut Your Losses Swiftly
Don’t make this mistake—it might cost you dearly. Not cutting losses quickly can plunge you into problems and frustrations. Be quick to admit mistakes. Reflect on what might have gone wrong. Don’t be rigid with your thinking. Be open to new ideas. Remember, you won’t be 100 percent correct. So, let things go.
Don’t Buy Stocks without Considering the Volume
Usually, you will be given trading information such as stock price as well as the volume. However, the tragedy is that many beginners will only look at the price and forget inspecting the stock volume. Making this mistake can be costly. It’s important to note that market makers may trigger the stock to move to one direction and do little to change the volume. Don’t fall prey into this trap. Here is how to approach it: If you notice that a price is moving in a certain direction, investigate the corresponding volume movement. It should accompany the price. This is the only way of evading this costly mistake. Be sure to validate the volume. Remember, the stock won’t move zero volume. So, if the stock moves on a low volume, stay away from it. It’s a hype move. Also, remember volume should always be used to validate the price.
Remember To Keep an Elaborate Trading Journal
When it comes to trading, the term “journaling” doesn’t usually pop up, right? Well, in most cases, people will trade, make profits, and exit or move to the next trade. This means that most traders don’t keep journals. This is a mistake. You need to keep a clean journal concerning your trades. This should include the good, bad, or ugly trades.
Here is how to keep a journal: Take screenshots of every trade chart. From here, put all your thoughts in writing. Include the reasons why you liked that chart or why you chose to enter that particular trade.
Don’t Trade With Large Position Sizes
When it comes to trading, nothing takes center stage quite like the size. So, when trading, don’t ignore the size. Thus, never risk too much. Risking too much on one trade will only complicate things and increases your chances of losing huge amounts of money at a go. So, don’t risk your whole account on a single trade. Count on good judgment when trading. Employ the right risk management best practices. Don’t put all the eggs in one basket.
Don’t Trust Stock Promoters
Let’s face it: Those Santa Claus you heard from your parents don’t exist. Nor does the Easter Bunny. It’s an illusion. But wait, you better trust Santa Claus and Easter Bunny than those stock promoters. You get the point, right? Trusting stock promoters is like living in an imaginary world. The stock promoters have been employed to pump up the stock price. Their second role is to ensure that every penny in your account is squeezed out. So, stay away from the stoke promoters’ emails lists. After convincing you to purchase the stock, these promoters will quickly sell their stock and leave you hanging. Plus, they will always make profits from your account. Is this something you want? Probably no. Then avoid trusting stock promoters. Trust your instincts. Do your independent research.
Mistakes in stock trading can be costly. They can make you frustrated. Plus, they will plunge you into losses. So, be aware of these costly mistakes. The above are the mistakes you should try to avoid at all costs when doing your stock trading.