Mistakes that Stock Traders make

As a stock trader there are many different mistakes that we all make and some of us on a daily basis. We are all humans and we all make break the rules once in a while, especially rules that we give ourselves. Some rules that stock traders break is that we don’t obey our stop loss, we average our stock position as it is going against us and lastly we chase a stock. These are rules that we shouldn’t break because they are essential to our stock trading strategies and rules. I know I have broken my rules, but every time I do, I end up getting smacked in the face.

Not having a stop loss is very bad to a stock trader. Not obeying your stop loss is also bad and here is why. When you stock trade you have to have a stop loss to remind you to get out because it is going against you. There are times where we will not obey them because we hope that the stock is going to come back up or down, depending on our stock position. Stock traders like to rely on hope when a stock isn’t going their way but hope isn’t going to help them out. You have to use your technical indicators and obey them. They are the reason why you have your stop loss where it is at and then from there you should obey your stop loss if the stock hits it.

When a stock is going against you and you don’t want to obey your stop loss you will do what most stock traders do and that is average down their price. What this means is that if you buy stock at $30.00 and then you add the same amount of shares at $29.00 then your average will be at $29.50. What this means is that now the stock has to go back up only 50 cents for you to break even instead of a whole dollar. This helps stock traders but sometimes it ends up hurting them in the long run because now they have doubled up their shares. For example, instead of losing $100 they will lose $200,

Lastly you should never chase a stock for any reason. Chasing a stock will only hurt you because you will find yourself getting hurt. For example, let us say that your technical indicators said to get in at $35.70 and you chased the stock to $36.10, that could be the top for a moment and it could retrace back down. Where the stock hit, it could hit your stop and stop you out. This would be the price to enter a trade. If a stock goes and you miss the entry, don’t chase, wait for a retracement then enter the stock

Knowing the mistakes that other stock traders do can help you in your online stock trading. The reason being is because you will be able to avoid what they do. If you do them, you have to think quickly on your toes and know that you are doing them. Always stick to your stock trading strategy and you will do fine.