Mistakes People Make When Trying to Trade Stocks In Stock Market
When people decide to start dabbling in trading on the stock market, most are concerned with growing their capital more robustly than they could in a standard money market account. However, the brutal truth is that most traders – if they actually stepped back and took a look at the numbers – would be better off leaving their money in an account. The interest would be higher than their rate of return.
But that’s not the way it has to be. In fact, with a solid mix of discipline, research and patience, the stock market can be a much more lucrative place to let your money go to work. Motivation to start trading takes many forms. Some people simply order a state pension forecast before realizing that they are going to need an additional source of income or enhanced savings if they are to continue their current standard of living through their retirement years.
Just remember, if you are really interested in taking up trading, it’s only going to be worthwhile if your yields exceed standard interest rates. With that in mind, keep an eye out for some of these common pitfalls when you are getting started:
Not buying enough shares
This is a particularly important issue and deserves first mention. Many new investors are eager to do their homework, research stocks and crunch the numbers. The only problem is that, once they have settled on a particular stock, they don’t enough shares to really make a difference.
Investing without a plan
Trading is an immensely complicated undertaking, and far too many people decide that they would like to start playing the stock market without putting a plan together first. A successful trading plan will pay as much attention to when a stock ought to be sold off as to win one should be bought.
Making decisions based solely on the price of a stock
The market fluctuates, and stock prices with it. Fluctuation in price is one of many indicators that can signal an opportunity to buy or sell, but this is by no means the only factor to watch.
Waiting for losing stocks to break even again
Sitting on losing stocks with the hope that they’ll gain ground in the future is just bad business. Approach dilemmas like this as you would the decision to buy stock. If you would not purchase a particular stock today, then there is no reason to leave it in your portfolio. Sell it off; cut (and claim) your losses; and move your capital into something more promising.
Letting hype affect the decision to buy or sell
One of the biggest problems with hype is that it is widely available to everyone. If a particular stock is getting media attention, you can count on the fact that thousands of other investors have taken notice, too. At this point, you probably don’t stand to make that much by jumping on the bandwagon. Better to have got on board before the hype set in.