Avoiding Common Stock Trading Errors

Avoiding Common Stock Trading Errors

Avoiding Common Stock Trading Errors

Successful stock trading requires discipline, dedication, adequate working capital, and a bulletproof stock trading plan. Most of the stock trading errors that are made by beginners are typically errors in preparation. Those who do well in stock trading are those who are prepared. Successful stock traders have a plan and they stick with that plan.

Having a plan will help you to minimize or even eliminate any trading errors. Why is that? The main reason is that the trading plan helps to eliminate guesswork. Guesswork is where most trading errors come into play. It really doesn't make sense to be in the middle of a trade and at the same time wondering what you should do next.

Here is a list of some other common stock trading errors:

Unrealistic expectations -- this is one of the most common stock trading errors that there is. Beginning traders often believe the hyped up advertising of many of the commercially available trading products in the market place today. The outlandish claims of thousands of percent return per month or zero drawdown are very tempting to those who don't know any better.

Failure to learn stock trading -- this is one of the biggest mistakes that beginners make. Many people believe that because they have achieved a level of success in another area of endeavor or in another business that they will be successful in stock trading. This simply is not true. Stock trading requires actions which may seem counterintuitive. Many of these types of actions are unique to the world of trading and are not necessarily learned in other areas of business. The smartest thing to do is to learn the ins and outs of trading stock as the skills and techniques learned are very specific to the stock market.

Inadequate working capital -- trying to make $100,000 a year starting with $100 doesn't require a great stock trading system, it requires a miracle! This ties in with having unrealistic expectations. Trading like any other business requires the proper amount of working capital in order for your business to function properly. Just as an athlete's body requires a proper fuel for peak performance so your account requires the fuel of trading capital.

Fear of losing -- the fear of taking a loss is very common amongst beginning traders. No one intentionally wakes up in the morning and looks forward to a losing trade. Where successful stock traders differ is that they know well in advance that some trades and some days and some months will simply be more profitable than others. Understanding this in advance help to prepare them for the inevitable losing trades that we all have.

By avoiding common errors and sidestepping pitfalls you can accelerate your growth as a stock trader. While some of these errors may seem ridiculously obvious and still wise to keep them in mind as you go about your day-to-day trading activities.

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