It is tough task but not impossible. There are so many traders and investors who are making a lot of money investing in stocks. Don't allow yourself to underestimate the difficulty. Trading in stock market is stressful and full time job you can say. For success in stock market you will have to make some solid risk management. According to Mr. Alexander Elder- It’s all right to make mistakes. He admits that if a trader is not making any mistakes means that trader is not learning anything. It is unacceptable to repeat those mistakes.” Awareness- It is the first step towards improvement. Making mistakes is not bad at all and it is part of the process, but repeating that mistake in future is bad. You must not repeat these points in trading which is given below:
Lack of knowledge: Before investing in stock or commodities you must know which sector, company is good for investment, trader should also know which level is best for the investments, how long you have to investment. For the investment traders should gather a lot of information about the national economic, industrial group and individual company. Before investment in any stock you have to collect the all information. But the truth of a normal trader is that they are not analysing anything and they buy when indices are moving upside and they don’t know the exit points. Lack of knowledge they bought at higher or hold their position, in earlier they thought they will not hold that stock but when stock move against their investment they hold those stock which is not for investment.
Too much Expectation: When a trader starts trading in stock market they expect too much from the stock market that is not good. Trading in stock market is too risky if you don’t have any trading strategy. Sometimes a solid trading strategy fails due to some unexpected data or unnatural things. Expectation from share market is not bad but if expecting too much return that means the trader will try to do some type gambling to hit that expectation which is highly risky, that will hit badly in future.
Listening to others: Listening to others view is another big problem of investors in stock market. Instead of improving their knowledge they try to listen the view of the expert of the market through news or social media that is wrong. They have to improve their knowledge because if all will follow that information all will start earning that is not possible. Big fish eat small fish this is the truth of share market.
Buying at high and selling at low: When a stock prices starts moving upside continuously in 4-5 days that counter attract to most of the trader and traders try to buy that stock they don’t know about the level they are purchasing. That is risky for investment because at that price may correct for a time being. Same in lower side (vice-versa). The best level is instead of Buying at higher level wait for correction and then enter in that counter. Ignore the higher and lower level for trading.
Trading on borrowing money or buying stocks on margin: Trading with borrowing money in stocks will always a risky business. Most of the Day trading strategies demand using the leverage of borrowed money to make profits. Day traders should know how margin works, how much time they'll have to meet a margin call, and the potential for getting in over their heads.
Trading against the trend: This is the common mistake in share market; they don’t know the trend of the market. Trading against the trend is highly risky. Most of the traders don’t follow the trend, they try to sell or buy on market sentiment which is risky. To know the market trend trader should learn the technical analysis course.
2024(2)
