If you are a beginner, looking for the mantra to be successful in stock trading, this article will provide fodder for your thought. To become a successful stock trader you require discipline, dedication, adequate working capital, but most importantly, a bulletproof stock trading plan. It is only those who prepare themselves well in terms of having a plan and stick to it ardently, can do well in stock trading. Some of the common stock trading errors usually committed by beginners arise from the errors in the preparation process.
Does a plan can help you minimize any trade errors? It sure can! Having a trading plan means you will be able to eliminate guesswork from your trading, which in turn ensures that you leave out most of the errors that occur during trading. Trading without a plan can get you into situations where you will find yourself wondering as to what your next step in the middle of a trade should be. And trust me, it will not be a pleasant scenario for you or for your trading venture.
Here we provide you a list that includes some of the other common trading errors, with the earnest hope that it will be able to save you from repeating them.
Unrealistic expectation— In stock trading, having unrealistic expectations can be one of the biggest errors on the part of the trader. Beginners in trading make the mistake of believing in the hyped up advertising of many of the commercially available trading products in the market. These claims sound lucrative but you need to save yourself from becoming a prey to bizarre claims such as thousand percent return per month or zero drawdown.
Failure to learn stock trading— Many people fail to understand that their success in any area of endeavor or in any business does not guarantee their success in stock trading too. Stock trading is an art and to achieve success in the same, one must master it first. It requires actions which may seem counterintuitive. Many of these types of actions are unique to the world of trading and it is not necessary that you will learn it in any other areas of business. In order to eliminate errors from your trading you need to learn the ins and outs of stock trading, in other words, learn all the skills and techniques specific to the stock market.
Inadequate working capital— If you are trying or simply thinking to make $100,000 a year starting with $100, you should be aware of the fact that it doesn’t require a great stock trading system— it requires a miracle! You can associate it with having unrealistic expectations. Like any other business, trading also requires a proper amount of working capital to function properly. Your trading capital works as a fuel for your trade, helping you to give your best performance.
Fear of losing— You shouldn’t expect to be in win-win situation all the time. Of course, no one wakes up in the morning and looks forward to a losing trade, but one who is in trading should be mentally ready to take a loss as well. Successful traders are those who know beforehand that some trades, some days and some months will simply be more profitable than others. Developing an understanding of the same in advance might prepare you for those inevitable losing trades that all traders have at some point of time.