by In this article, today we will be discussing the 10 Common Mistakes In Stock Trading. We’ll be discussing the Common Mistakes In Stock Trading which are similar in intraday trading, swing trading, and positional trading are as follows:
10 Common Mistakes In Stock Trading
10 Common Mistakes In Stock Trading in intraday trading, swing trading, and positional trading are as follows:
1. Not having a trading plan Initially
- A trading plan refers to a systematic approach used to identify and trade securities based on several variables, such as investment objectives, risks, and time.
- A trading plan lays out procedures and conditions under which to search for an asset class and execute trades.
- A trading plan serves as a guide for traders and investors to maximize profits and minimize market risks.
- Initially I had no proper trading plan.
- Risk and rewards were not defined.
- Even when I tried to make a plan,
- I couldn’t stick to it due to 2nd guessing and ended up making losses.
- Overtrading and oversize are normal for traders without plans.
2. Trying to buy bottoms and selling tops
- ‘Squeezing the last drop of profit is the sure recipe to get rekt’ I tried to buy oversold stocks and sell overbought stocks.
- Guess what?? ended up making losses In trading, momentum is our friend, Try to be in the direction of the trend.
- One of the main reasons why “buy low and sell high” is so difficult is because one may not be able to predict when the market is high or low enough; at which price it’s overbought or oversold.
- For a bull trader, the market price is always low and for a bear, it’s always high.
3. Selling a big winner early
I bought #Adanient at INR 510. I sold a few days later after a 10% gain Current price: INR 1500 I was in a rush to take profits, so I missed out on HUGE upside If the opportunity is huge, hold!
4. Not buying stock due to high price
I’ve made this mistake over and over again I didn’t buy Adani stocks last year because the prices were high Current price: Higher In trading, Buy high sell higher is a better strategy than buying low selling high.
5. Trading in very small time frames
I saw some videos trading in 1 minute / 3 minutes candle and got influenced. In starting it worked also but later after doing overtrading and making losses you get to know that trading in a very small time frame is just speculation, not trading.
6. Trying to trade news and rumors
- Most of the news that moves the markets is scheduled, such as earnings reports and economic updates.
- Plot your strategy in advance rather than reacting on the fly.
- Most news events are good for one asset class and bad for others. Hedging your portfolio cushions losses.
- Avoid reacting to crowd sentiment. If you have confidence in your choices of investments, stick with them.
- This is the best recipe to get rekt as early asap.
- I remember once I bought #Idea on some news and the next day it tumbled as hell as the news was fake.
- Trading on rumors without proper risk management will surely incur losses Avoid it.
7. Not willing to accept price action and trend
- I used to make many trades with small stops contrary to the bigger trend and made losses no one can win in the market for long against the trend. the trend is our friend.
- Avoiding is the best policy when unsure about direction.
- Price action trading is a strategy that helps to predict market movements by spotting patterns or ‘signals’ in the price movements of an underlying market.
- If traders believes in price action trading then there is huge possiblity of that trader to become a successful trader in future
8. Stop comparing yourself with other traders
- I have a bad habit of comparing myself against other successful traders but, if other traders are doing better than me, SO WHAT?? That doesn’t matter! What matters is how I am doing compared to my last year! Comparison is the thief of joy.
- What works for others may not necessarily work for you. You must find a method of your own, one that matches your trading skill and personality.
- Remember that comparisons will only make you feel frustrated and distract you from forging your own path to profitability.
- Don’t think you are trying to beat others to an imaginary finish line.
- People who achieve great things work independently and on their own terms.
- They don’t care how others are doing. They follow their own timeline, their own passion, and look INWARD for where to go next.
- How you perform has nothing to do with how others perform.
- All comparisons will do is torture you. You will feel jealousy or envy.
- To maintain motivation, focus on improving your past performance record, rather than looking at how other traders are doing.
- Run your own race and finish at your own pace.
9. Making bigger bets after winning or losing big
This is a common practice which almost every newbie does. After making a big profit, I used to get overconfident and make aggressive bets the next day which lead to a bigger loss which is out of the plan. this happens with many.
10. Repeating the same mistakes
We have a habit of learning trading lessons the hard way and slowly I can’t guarantee that I’ll not repeat some of these mistakes again (especially the “selling winner early” mistake) What can I say – I’m human and We all are human.
Conclusion
- Overall if I conclude these are my 10 Common Mistakes In Stock Trading which ruined my 1st phase of Intraday Trading then I learned from my mistakes which help me to grow as a trader.
- One should follow the Risk Management, Money Management, and Fear and Greed concept of the market to avoid big losses.
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- I hope you understand the 10 Common Mistakes In Stock Trading of trading psychology very well.
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