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Common Mistakes
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What are the common mistakes that most investors make?
Whether you are new to investing or an experienced pro it helps to periodically review the basics techniques of investing. After all, the only thing you have to lose is your money!
The following list illustrates common mistakes made by investors. There is not a priority to this list because each item can cause a loss in your portfolio. The common mistakes are:
- Being Comfortable over some period of time investors get comfortable with placing trades. Remember the first time you placed a trade? Your first trade brought fear and trepidation. What if I make a mistake? What if I lose all my money?
These are good fears? Silly mistakes are made when you get comfortable!
- Not Practicing Your Trades New traders want to start making money right now. Especially after practicing some trades for a day and those trades happen to be profitable. The new investor believes they have it figured out. There is always sufficient time and plenty of profits to be made. Most investors, however, do not have a limitless pocket book!
With each new trading strategy do not assume your prior experience gives you an advantage. Practice your trades with each new strategy undertaken.
- Chasing the price the support and resistance levels are there for a reason. If a stock price gaps up many investors chase the buy price target to the market price. The false feeling of euphoria one gets after winning an item at an auction comes close to chasing the stock price. You have not won anything! That item you bid on cost you money!
Stick to your plan. If your Buy Limit does not executed you have not lost anything!
Remember he who runs away has a chance to come back another day!
- Broker loyalty your broker and you have one common goal that is to make money. The broker has a distinct advantage in that even if you lose money the broker makes a commission or fee on your trade.
Changing a broker is time consuming. Still not a reason not to change brokers. If your broker does not support conditional trade orders, makes mistakes on your orders (electronically or placed with a broker), does not send you trade confirmations electronically, does not offer trailing stop loss orders you may want to consider finding a new broker.
- Not using Stop Loss Orders This especially happens when investors make a few profitable trades. Stop orders are there to limit your losses. Market changes often times are caused by emotional reasons rather than sound economic fundamentals. Whentobuy.com looks to minimize your risk and maximize your profits.
Not using Stop Loss orders have also caused investors to lose their hard earned profits. As the stock price moves upwards the Stop Loss of 3% should always be moved up. We have seen investors up $300 only to have the market turn and suddenly find themselves with a loss. The Stop Loss order minimizes risk and locks in profits.
- Looking for the big return - its very tempting to look for quick big returns. Yes, there are possible and occasionally you will read about a trader that cashed in on a $50,000 trade in one day. Whether the trade is stock, options, indexes or anything else is not important. What level of loses where incurred chasing that one big trade usually gets overlooked.
Whentobuy.com looks for small consistent profits over short time periods. When the cycle breaks use the Stop Loss to ride the price move until it is over.
- Poor cash management in all investing there is the risk of losing money. Once your portfolio reaches your goal do not continue to place all of your profits at risk. Pull money out of your daily trading account and look for laddered bonds and other investments. Protect what you have earned!
Do you want to learn more? Do you want to begin earning profits your first week of investing? Join now!
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