Ten Common Mistakes of Novice Traders
In the 21st century, more and more people find themselves attracted to the stock market. Unfortunately, many of the people who find themselves involved in stock trading end up making any number of common mistakes.
Here are some of the most frequent ones:
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1.Most of the people have not taken the time to educate themselves about the stock market, stock investing or stock trading. A lack of education and a lack of knowledge about the stock market and stock investing can and oftentimes does have dire consequences.
2.A significant number of people begin stock investing without any sort of investment strategy or plan whatsoever. It is an absolute must for you to develop a plan and an investment strategy before you spend even one dollar on the stock market.
3.Another mistake that novice investors oftentimes make when entering into the stock market involves a failure on their part to have an overall investment strategy. They fail to realize that stock investing should only be one part of their overall money management scheme.
4.One common mistake is trading in just one direction. For example, a person will always trade long and eliminates short trading - even in instances when short trading would be financially beneficially to them.
5.A number of novice investors have completely unrealistic expectations about the gains in stock market. They believe that they will become instant millionaires when in reality, success in the in stock investing requires planning and effort over time.
6.Related to some of the other mistakes novices make when entering into the stock market can be found in overtrading. They buy stocks rather randomly and often(or, in some instances, actually randomly) without any real thought. They pepper the market with an tons of investments here and an investments there with no strategy at the core.
7.No matter how much thought a novice investor gives to stock investing, and no matter how serious he or she is about becoming involved in the stock market, mistakes are going to inevitably happen. Unfortunately, on many occasions, a novice investor simply will not learn from his or her mistakes and repeats them … time and time again.
8.A good number of novice investors become emotional, sometimes overwrought about investing. Rather than being driven by their brains in making stock investing and money management decisions, they are governed by their emotions, which can have disastrous consequences.
9.There are countless examples of novice stock traders who exercise poor money management. They simply lack a proper element of control over their expenditures, which can cause problems when they turn to the stock market.
10.Finally, many novice traders fail to seek out advice from people who have developed an effective trading system over time. There are two ways to learn about the stock market and stock investing:
- trial and error
- learning from others who have success on the market
From one of the greatest traders of our time, Nicolas Darvas:
"I get hundreds of letters every year from investors and I can see the regular patterns of failure.
The reasons are:
-They are not dedicated to one method.They lack the discipline to stick to one method and wait for the very best opportunities.
-They gamble ion tips,advice and in low priced stocks.
-They have not learned the basic of what good trading is.