Stock trading is a business where even the slightest mistake can lead to huge loss. Investors must learn common share trading mistakes to be avoided. They must learn from their own past experience, experiences of friends and family members and other market experts.
Here are some tips and advice on how to avoid common stock trading mistakes:
|Avoid Stock Trading Mistakes|
- Quality Vs Quantity: Buy only quality stocks. Do not run after cheap and poor quality stocks.
- Cut Losses: If your stock is continuously falling then book loss at 7% - 8% below your purchase price. This will protect you from further loss.
- Follow The Market: Yes, follow the market and try to buy at the right price. This way you increase your chances of making profit and in case the market goes against your stock, you will suffer minimum loss.
- Low Stock Prices: If price of a stock is low, it doesn't necessarily means that you can buy it. Do all your homework before investing.
- Be Practical: Don't be emotional is stock trading business. Be practical. If you have bought a stock for $ 100 and it comes down to $ 92. Sell it off and close your position. Buy it back when the market conditions are in favour of the stock.
- Invest for Long Term: Never invest your money in stock market for short-term. Invest for long term.
- Portfolio Management: Decide and create your investment portfolio. Investing without a planned portfolio is not professional. Have a diversified portfolio.
- Set You Goal: Set your investment goals. Decide when and why do you need the money back and invest accordingly.
- Monitor Top Mutual Funds: Keep an eye on top mutual funds and where they are investing money. Fund managers at mutual fund companies are highly qualified and experienced people. They do all expert study and research and study the market before investing. Spot stocks where these companies are investing and do some homework yourself and invest in those stocks.
- Have Patience: Never be in hurry in stock market business. This business demands patience. Do not panic.
- Monitor Stock Market: Monitor the stock market and current affairs in the country. Monitor top news and act accordingly.
- Avoid Margin Trading or Intraday Trading: Margin trading or intraday trading can be highly risky. Avoid trading.
- Book Profit at The Right Time: Book your profit at the right time. Never be too greedy.