It’s okay to make mistakes in stock trading, as long as you learn from them. But making the same mistakes over and over again will cost you a lot of money. Here is a list of common mistakes that stock traders tend to make and the ways to avoid them.

Trading when you can’t afford to trade

One common mistake that traders make is trading with the money that they can’t afford to lose. Some traders use money that is supposed to be for bills, mortgage, tuition, or an existing business. Others borrow money in order to trade. If there is a big risk involved in trading, you may trade out of fear and will not apply logic. If you lose money that you are not supposed to trade, you will be forced to recover the amount by trading again and more often than not, you will end up in a deeper hole. So before you trade, make sure to set aside an amount that you can afford to risk.

Trading after a streak of losses

There are good and bad days in trading, but when you have continuous losses, you need to take a break. When you are in a losing streak, stop trading for a couple of days to break your pattern of losing. Think things through. You don’t need to change your strategy if it has worked for you before. It is normal for the stock market to go high or low. But if you have never been successful with your trading strategy, re-evaluate it and develop another strategy before the market opens. There are several online stock trading newsletters that could help improve your trading strategy.
Even the best traders in the world lose money once in a while. It’s okay to lose as long as you have the ability to recover from your losses and exit profitably.

Falling in love with a stock

Most traders make the same mistake of buying just one or two stocks. If you exclusively trade your favorite stock, you are missing a lot of trade opportunities. The key is to trade several stocks and make sure that the winning trades are much larger so that they not only make up for the losing trades but also give you profit at the end of the day.

Trading without a plan

New traders get excited with the idea of earning money fast and easy but they often forget to develop a plan on how to stock trade. Every trader must develop a set of rules on what to buy, when to buy, and how much to buy. A trader must know when he will take profits out of a stock and when to get out of a bad trade.

Trading without an exit plan

Every trader must determine the amount of money that they can afford to lose before entering into a trade. You must have an exit strategy when things do not work in your favor. Once you have lost what you can afford to lose, you need to execute your exit plan.

If you can minimize your mistakes, you can maximize your earnings.

Author Bio: William F. Gabriel gives practical tips on online stock trading newsletter and day trading courses.

Category: Finances
Keywords: online stock trading newsletter, day trading courses