Trading involves the investment of money, and if invested wisely, can revert to you with huge profit. But, as luck may have it, sometimes you may also end up losing all your money. Thus, you need to be careful when it comes to trading.
Often people mistake expertise for experience and try following the lead of people who have been trading on apps, like the Arya app, for a long period. But, trading involves careful strategies which may come from a beginner, as well as, an experienced trader.
The main thing to keep in mind is to keep your cool and remain patient for the results. This article has put together a few common mistakes that must be avoided while trading.
Not having an investment goal
You need to have a clear objective for trading so that you can gradually work towards fulfilling it. The absence of a goal will result in a lack of motivation and, thus, poor performance.
Timing the market
The common mistake that traders make is to time an investment according to how the market is faring. The state of the market does not affect whatsoever whether you will win any profit or your money will go down the drain. You end up missing good opportunities.
Concentrating on individual stocks
People assume that if they pick on each stock, one after the another, they have a greater chance of gaining profit. They use up their sources and thorough strategies on such naiveness.
Instead, you should broaden your vision and distribute your investment by asset allocation. This evens out your chances of winning or losing.
Relying on past results
You must understand that there are a lot of factors in play that decides whether the stock you invested in will win or lose. Thus, hoping for it to win just because it did so in the past is extremely foolish.
The market may have been favorable a while back, but not necessarily so, anymore. You must consider each stock independently and work through them to make sure you do not lose your money.
Not having enough patience
It has already been stressed how important patience is in terms of trading. While a game is equally about winning as it is about losing, trading may also involve losing for a bigger win later.
But, you need to keep your patience intact for this to work. If you give up midway, then you may be passing on a pretty big opportunity. Have faith in yourself, and do not take it to heart.
Holding on to a stock
If you think you have a losing stock, you might consider saving it hoping for its value to rise. But, you also run the risk of waiting for its value to drop lower. To avoid this, you must sell an unfavorable stock at the earliest possibility.
Similarly, if investing in the same stock has been benefiting you lately, you may feel like continuing to invest in it, which is not a bad decision. But, make sure you are not missing out on better opportunities.
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