Common Trading Mistakes :

Dear Readers &Traders ,

Have you been known to make mistakes when trading? We all slip-up, even the best of traders. However, the traders who make the cash also make the least of these common trading mistakes.
The trend is your friend. If the stock is climbing up and up, and you keep shorting the stock,time to look again at what you're doing.

Use a stop loss! Being disciplined is imperative in this business. By using stop orders, you can protect yourself against a dangerous loss. However, don't make them too tight, the market might not have a chance to move, and you'll miss out on the profits! A rule of thumb is to set stop losses just below the low of the day or just below a support level.

Don't let the cookie crumble! Don't ever be afraid to admit defeat. Just take your loss, and move on. Make your decision to either stick to your plan in the next trade, or get out if the market takes a dive. Most traders who hold out on losses, expecting the market to turn around, just end up waiting and waiting, and loosing more money in the meantime.

Don't follow the crowd! "Safety in numbers" almost never applies to trading. It is always better to lead the pack than follow the herd. You don't want to chase the others. It will correct sooner or later (to a certain degree). You need to form your own opinions, and then act with confidence! You will make profit more by making your move before the crowd can react.

Don't reverse your position! If your position is wrong, resist the temptation of turning it all around. Get out and take a rest before you make another move. Think to yourself about what went wrong.

Don't pick tops and bottoms! Let the market pick them for you. If you try to pinpoint exact tops and bottoms, you will be left frustrated. It is also risky business! Use your patience to wait for highs and lows, and that will increase your odds of making a profit. Your goal should be to get the price movement between the bottom and top. You will never go broke with a profit on each trade. Keep your emotions balanced! Don't loose your cool on bad trades, we've all made them. Try not to get too upset, as it might affect your judgement in other trades. You'll make more intelligent trades if you keep a level head on your shoulders and stay focused. If you are an emotionally driven person, you might want to invest in other areas.

Watch out for your greed! Swallow that appetite! The emotion that will kill you is greed. It's a good idea to let profits ride, but once you've made a considerable profit, it's a good idea to take the money and run. How well you take control of your greed and fear will determine the level of success as a trader.

Trading too many stocks at once. Don't try to be a "Jack of All Trades." You'll be a master of none. By spreading yourself too thin, you have too much information to look after, and won't be able to keep on top of things as well. Focus on one position at a time, until your confidence has matured.

Do your homework! Research, research, research! Trading is demanding, you have to put the time in to get good results. You also need to have a good plan.

Don't sell to cover a short position or buy to cover a long position! Do the opposite! Always BUY to cover a short and SELL to cover a long.

Don't average down. Buy a stock that is going up, not down! Short the stock that is going down! If you have to average down, that means you didn't cut your losses at your stop loss point.

Check out the risk factors! Always check the spreads, volume and charts. Don't take big risks if your wallet (or your livelihood) can't back them up.

Lack of concentration ... wake up! Don't trade if your life is in an upheaval. You need to be focused when trading, not distracted. Make sure you're getting enough sleep.


Trade Well
Regards

:: Jinvani Advisors ::