No one is perfect in life, it doesn’t matter how good you are in something there will always be a little corner that would be left for errors.
This reality is no different when it comes to investing in stocks. Therefore, this post is written to share with you some of the very common mistakes that you should avoid.
Without further ado, let’s move on to them.
Mistake 1: Trading within your friend’s time frame
No one knows you better than yourself, not even your best friend or the person who’s the closest to you.
So no one can make the best decisions for you besides yourself.
You’re the one who would always knows the best time for yourself to trade, how you would want to trade, and how much money you would be willing to put into a stock.
If you have yet to know when is the best time for you to trade or if penny stock is even your best bet.
Here’s how to at least have an idea of which market is better for you or when is the best time frame for you to trade.
If you’re someone who prefers to hold your shares for weeks or so, I would strongly recommend that you invest in blue-chip stocks instead of penny stocks.
Penny stocks are very volatile, changes in their prices are consistently being made.
Oftentimes, there are factors behind these changes that aren’t made available to us as traders.
It does make it even harder for us to trust those types of stocks, let alone hold them for long period of times.
When someone decides to hold a penny stock for that long it doesn’t usually end right for that person.
You’ll have to be very careful as of how long you’ll hold your penny stocks and when you should sell them.
On the other hand, the time frame to trade is something you’ll have to find out yourself because there’s no one size fits all when it comes to that.
Penny stocks require you to be devoted, you need to set time apart for it if you want to succeed.
Consequently, you’ll have to leave space for trading in your daily schedule so that you know this specific period of time is to trade.
Be sure this period of time you set apart is when you feel is the best time for you to trade.
Mistake 2: Believing in price forecasting
If you were so lucky that a price forecast had worked for you in the past, don’t believe it will always do.
You’re putting yourself in great danger as forecasting aren’t meant to be always right.
Forecasts are purely predictions. Need I say more?
If it was so easy to know how much profits one will make through a stock, no one would ever even loses money in any market.
We may make some educated guesses as there are so many tools out there to help us make the best decisions.
Nonetheless, forecasting a stock’s price is a very difficult if not impossible thing to do accurately.
Mistake 3: Pulling or canceling your stop-orders
If your position hits your stop order it usually means that you’re about take a loss.
You may feel like you want to cancel you stop order which is something many traders do, but it’s also one of the mistakes that may cause you to augment your loss even more.
Before you entered your position your plan was to accept the loss wherever your stop order may have been placed.
You have to be true to yourself, don’t change your well-thought decisions at the last minute for a decision that you didn’t even have time to think about.
Every 50% loss started as a 5% loss, it’s always better to accept the 5% loss and come back another day.
Mistake 4: Get trapped in analysis paralysis
Sometimes traders get paralyzed holding a position and wasting their time analyzing too many unnecessary variables.
It may be better to take the initiative and decide one way or the other, even if you’re not 100% certain of the right answer.
Freezing with your position will not alter the market in any other way. Whatever the outcome was going to be will be.
Don’t get me wrong.
You will always make mistakes while trading no matter how smart you try to be.
The only way you will never make any mistakes is not to trade at all which is out of the picture.
Fortunately, you’ve just read about these very common mistakes and you should do your best to not make them.
Share with us some of the mistakes you have made thus far in the comment box bellow.
Don’t forget to share this post so that many of your colleagues can read it as well.
Good luck trading!