Investing in buying and selling stocks of companies can be very rewarding, but it’s not all about the money. Trading shares online is a risky business. About 95% of traders fail to break even simply because they commit some simple mistakes that are easily avoidable. Here are the top 6 common stock market trading mistakes you should look for if you don’t want to get burned.
Don’t Judge a Company by Its Share Price and Volume
Many new traders focus on this figure when trying to find their next investment target. You need to consider that share prices fluctuate wildly in the short term, so check the price trends over several months before deciding whether or not to buy. You can check it out here.
Don’t Forget About Fees and Commissions
One of the most common mistakes made by traders is forgetting commission fees while entering and exiting trades. It is especially true with day traders who might buy and sell stocks several times in one day. When you decide to pull the trigger on a trade, remember to include any stock fee or commission costs for that transaction.
Business trading is not something everyone can do. To succeed at trading, one must consider all the factors that could impact their investments and decisions. While many people see investing as a simple way of making money, this couldn’t be further from the truth. Trading is risky and comes with many hardships and challenges that inexperienced traders should avoid. Here are six common stock market trading mistakes every investor needs to look out for if they don’t want to get burned.
Don’t Fixate On A Single Broker
The first mistake many traders make is placing all their hopes and wishes on a single broker. It’s even possible to find multiple brokers all claiming to be the best at what they do. While choosing a broker can help speed up trading by shaving off several days from the buying process, every trader should know that no two companies are exactly alike. With this in mind, you need to diversify your business portfolio and look for good deals with other brokers. Choosing a reliable company is vital, but if something goes wrong, then you need an alternative.
Don’t Judge a Company by Its Share Price and Volume Alone
Many new investors focus too much on a company’s share price when looking for a new investment target. While it’s true that share price is one of the primary factors to take intoaccount, many traders forget about the volume of shares traded each day. You need to remember that stock prices fluctuate wildly in the short term, so check out the price graph over several months before considering whether or not you should buy these stocks.
Don’t Get Emotional
Trading can be very stressful and emotional, but there’s no room for feelings when playing this game. Many people make buying or selling decisions based on their emotions instead of logic and rationality, which inevitably makes terrible decisions. Some traders even go as far as chasing losses just because they want to break even! When trading stocks online, it’s best to remain stoic and avoid trading based on emotions.
Don’t Make Blind Bets
Too many people trade in an emotional state, buying stocks because they have become greedy or selling because they are scared. It inevitably leads to losses since the stock market isn’t exactly a place for gut feelings. Contrary to what you might think, it’s safer to invest in companies you know little about. It reduces your investment bias and makes price fluctuations less of an issue when deciding when to sell.
Don’t Trade Too Much: Keep Your Trading Simple and Small!
Another common mistake is the urge to make trades every day without considering everything that could go wrong. If you want to be successful at trading, then keep your investments simple. If you see a good opportunity, hold onto the stock for several weeks before selling it off so you can avoid short-term fluctuations in price. Likewise, don’t sell stocks too early or hold onto them after the point of expiration. Take your time and remain calm while trading!