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Mistakes In Stock Investing And Trading

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Learn about common mistakes traders do while trading or investing in stock markets, options or futures trading. I have already emphasized a lot of times common mistakes stock investors and traders do while investing in stocks markets. However these are some very common and basic mistakes investors do:

1. Impulsive Trading:

This is the most common mistake traders do. For example today Nifty is falling. I can assure that Puts will be bought today more than Calls.

NSE 3-Feb-2017 at 11.19 am

NSE 3-Feb-2017 at 11.19 am

Impulsive trading or investing is just like impulsive buying. Both are waste of money and time.

Without doing any research traders invest their money in either a stock, option or a future.

For example if they have decided to trade SBI, they will see its going up or down. If going down short the stock or buy a put as per their comfort strike price or sell a future. If that stock is going up, then they will buy it, or buy any strike call, or buy a future.

No plan nothing, just impulsive trading.

What happens after that is a different story. What is more important is that there is no plan in this trading. It is obvious that impulse traders never make money.

Impulsive Trading is emotional trading – a must avoid in stock markets.

Do not let emotions rule your trading style.

2. Intraday Trading:

In India Intraday Trading also known as Day trading all over the world is the most popular form of trading. From equities, to options to futures they try everything and keep losing. After a few lakhs of rupees lost these kind of traders either stop trading or try some other type of trading.
Forget stock markets for some time now.

In the real world who are day or Intraday traders?

Labours, rickshaw pullers, street shop owners, dhobis. But are doctors, engineers and top executives day traders? No. They all look at monthly income or yearly income. They are least bothered about how much they will earn is a single day. All they look at is yearly package before taking a job. Once they get it they do not even calculate total yearly income divided by 365 to get the figure of what they earn in a day. It’s actually foolish.

For some strange reason the same doctors or engineers when they enter the start trading business they begin stock trading as a day trader. I know how much ever the experts will write against day trading, this trend will continue and is likely to continue till stock markets lasts. Why people look at stock trading as a different business is what I fail to understand.

Stock trading is just like any other business. Do not treat stock market trading as a different business. Risk and reward both are there so you must take a balanced approach and think long term not Intraday.

Our job is to write against day trading but its not in our hands that those who read listen or not. So take your call it’s your money. If you are losing money day trading stop it today.

Recommended reading: No Plan Trading Is A Huge Mistake In Stock Investing

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Open ZERO Brokerage FREE Share Trading Account - Buy and Sell Stocks Without Brokerage - Set GTT (Good Till Triggered) Orders on System and Forget

Traditional brokers charge a lot for brokerage; however, this broker does not charge anything for stock buying and selling. Also, you can set GTT (Good Till Triggered) order after buying a stock, so that the system can sell the stock automatically at your target price even if you are not monitoring the market. Only 25k is blocked for option selling with hedge. Also, you get a lifetime free account in Sensibull (virtual trading app & strategy builder) which charges Rs.800/-+GST a month. It takes 5 minutes to open an account online. Click here and Open Free Account with Them Today >>

About the author: Dilip Shaw I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

{ 7 comments… add one }
  • Rajendra February 3, 2017, 3:31 pm

    Sir I Rajendra Prasad is a senior citizen my age is 66 years and no earning member is with me so please help me by telling how to work so i may fulfill my day to day expenses
    Thanking you in advance
    Rajendra Prasad

    • Dilip Shaw February 4, 2017, 10:48 am

      Rajendraji nice to know even at 66 you want to work. Please email me as this is an open blog that everyone can read, so please email me I will help.

    • amit February 5, 2017, 2:07 pm

      Sir, don’t get me wrong but think out of the box.
      Forget the market, do some small business.

      • Dilip Shaw February 5, 2017, 5:37 pm

        Thanks Amit but I think there is some confusion in traders mind. Stock market trading itself is a business. If done in small scale it is small, if done in a big scale it is big, like mutual funds do. Mutual funds are into huge business related to stock trading worth thousands of cores. Can you say this to Warren Buffett or Rakesh Jhunjhunwala?

        Indirectly you are saying there should be no stock exchanges in the world. If there are no stock exchanges there will not be any big businesses like Reliance, Infosys, ITC, Google, Apple, FaceBook etc. So no one will get a private job everyone will look for a government job which is impossible. People will die of hunger. Is this is what you want?

        In fact governments wants these companies to flourish and do business in their country. If there are no stock markets these things will not exist and there will not be any economy.

        Moreover if I know how to profit from stock markets why should I stop myself?

  • amit February 6, 2017, 1:11 pm

    Sir, sir, sir,
    It was about Rajendra …
    As he is 66 and want money for daily expenses, how can he choose market for that.

    • Dilip Shaw February 6, 2017, 1:20 pm

      Oh Ok, in that case you should have taken his name I got confused 🙂

      Actually its not easy for a 66 year old to start a small business too. If you are not taking too much of risk and taking only a portion or your retirement money to trade very conservatively there is nothing wrong with that. This is proper risk management. And do not forget that even at 66 people need money.

      Money is required for our whole life – we cant escape the truth.

  • ASHOK February 6, 2017, 1:25 pm


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