PostHeaderIcon Common Trading Mistakes

Traders always have the means to change their positions in the market more often than investors. Traders are more into short-term gains and therefore make more frequent transactions than investors. Because of this, many traders are prone to make mistakes because of the number of trades they make on a regular basis. Here are some of the more common mistakes most traders make.

Lack Of Trading Plan

In any situation, having a plan of attack can be the difference between success and failure. This is the same for having a trading plan. Many savvy traders always have a plan in place before they make any trade. This includes knowing the amount of capital they need for the trade, their entry and exit points, as well as the maximum loss they are willing to take. Some neglect doing this beforehand and end up making a lot of mistakes along the way.

Neglecting Use Of Stop-Loss Orders

A stop-loss order is a trading mechanism that allows traders to limit their losses in the event of stocks behaving wildly. Traders set the parameters on when the stop order is to be executed. When the situation happens, the order is executed automatically. Unfortunately, many fail to make use of stop-loss orders when making trades. This can lead them to considerable losses because of it.

Taking The Bait On False Buy Signals

There are certain cases where stock prices may go up or go down. This may lead some traders to look for falling prices as a signal to buy. Doing it outright may be a mistake. There are certain factors that may cause the stock prices to fall. Make sure to analyze the company fundamentals before making the trade. This will usually help traders pinpoint the reason for the falling stock prices and whether the fall will continue. Simply relying on false buy signals without investigating can be a costly trading mistake to make.


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