Most of the new stock market trader loses confidence and their hard earned capital when they start investing in stock market by themselves. New traders significantly increase their chances of investment success by becoming aware of some common mistakes and taking actions to avoid them.
Lets see the the mistakes in detail.
1. Understanding the market & trading
When new traders started thinking to invest in the market they don’t have enough knowledge about the market. Before starting, they must well aware of trading procedures and other terms like The stock exchanges, The trading Mechanism, Settlement cycle and trading hours of exchanges, market index, Market regulation, etc.
So its highly recommended to do strong homework about trading process before start trading.
2. Don’t have a proper trading plan
Experienced stock market traders always have a well defined plan to trade in market. They well know the entry and exit point, the money to be invested in a particular stock, and the maximum loss they are willing to take etc. Many of new trader don’t have a proper trading strategy to trade in market.
Having a good trading plan will be more profitable in the long term and short term trading as well.
3. Proper Use of Stop-Loss
Putting a proper stop-loss orders are very crucial for trading success, and failure to implement a proper stop-loss in one of the biggest mistake that can be made by a newbie trader. The stop-losses commonly ensure the minimum losses when the market is down or up. Generally a beginner trader cancels the stop-loss on a losing trade just before it can be triggered, because he or she believes that the market will be reverse and still they can book profit on a particular stock.
So it is a another recommendation to traders that use a tight stop-losses.
4. Do Not doing proper Research
Beginner traders are often not doing proper research before they buy a particular stock or equity. Doing proper research is critical because new traders do not have the enough knowledge of data release timing, trading patterns and seasonal trend that experienced traders have.
So do proper research about the stock or equity before initiating a trade.
5. Trading multiple markets.
New traders often trade with multiple markets they move very quickly to stocks to futures to options to commodity to currencies. In fact, trading in multiple markets may prevent the new traders from gaining the necessary experience to be a professional trader.
Many beginner traders start trade with overconfidence, they think that they have enough knowledge and money to earn quickly from the market, but it can be dangerous. Traders can lose their big amount of capital in a very short time of period. So this kind of attitude must me avoid while trading.
Conclusion — Trading in the stock market can be more profitable for beginner traders if they avoid the mistakes which mentioned above. Beginner traders also can take help from a trusted investment advisors which offers the quality Commodity Tips along with the current market updates and news.