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.
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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