Share Market

Mistakes in stock trading are all around. There could be a hundred explanations of what led to the failure in stock market? The most common mistakes could be the following:

· Lack of knowledge is the biggest issue which leads to mistakes in stock trading. People simply indulge themselves into something which they are unaware of.

· Lack of a strategy about the investment to be made is big issue. There should always be research done with regards to the alternatives for the investment and also the backup plan.

· One common mistake is trading in just one direction. For example, a person will always trade long and eliminates short trading – even in instances when short trading would be financially beneficially to them.

· Lack of money management. This along with planning is most vital and most of the mistakes are made due of the lack of these factors.

· Stop loss not defined. One great way of losing money when a decision goes wrong is not defining the stop loss. Stop loss restricts the loss by stopping when a specified point is reached.

· Unnecessary changing the strategy: It is normal for markets to go high and low. Don’t get paranoid if the things don’t go according to your plan. . Barring some very visible signs that warrant change, the key lies in planning the trading strategy before the market opens and adhering to it religiously irrespective of crests and troughs. 

· Emotions: in stock trading there is no place for emotions like greed, hope, and fear etc. everything is totally calculative. It is all about how well you understand the market.

· Overtrading: Day trading, of course, is the epitome of overtrading. Most people just are not equipped, emotionally, intellectually, or mechanically, to day trade and statistics tell us that most are not successful at it.

· Picking a favorite: there should be no favoritism while picking up stocks. This could lead to uncalculated buying of the stocks which may result in losses. Picking a favorite is a mistake.

· Increasing share size to make up loses

· Not Calculating a Stock’s Risk-Reward Ratio. This ratio should be calculated before investing.

· Improper Timing: timing mistakes are very common among the traders. A sense of proper timing is very essential.