Why are you trading?
Many traders wonder when I ask why you are into stock trading. Many people never thought of themselves, the basic reason why they are in the game. General mistake amateur traders do is they think stock trading can give them easy money. Ask yourself, if that was the case why many would have gone to 9 to 5 job?
“Trading is simple but not easy. If we work at it, it’s worth the effort”~ Kiran Nayak
Mistakes in Stock Trading
High percentage traders enter the markets without the idea of how to plan and succeed in a long run. High expectations of returns put them in the greatest danger. That is the reason we hear 95% traders lose money. Let us do some test. If I request you to take Rs.2000 note and burn it, will you do it? If you can’t do it because of the pinch it gives, why you are losing thousands of Rs. by blind stock trading.
How to avoid the mistakes in stock trading?
You have to devote sufficient time and energy to develop the trading plan. By asking following questions you can prepare simple Trading Plan.
What Markets do you trade?
Which time frame suits your style of stock trading?
Whats your entry criteria?
While exiting for profit target whats your exit criteria?
In case of the loss how you are going to exit?
How much capital do you allocate for this particular plan?
Using excessive leverage may be because of your ignorance. Control your risk such that your hope of easy money will not put you out of the game. Focus on controlling your risk and manage your trades such that over a period you reap the potential benefit.
I highly recommend you read the article written by my friend Indrazith, who is the full-time trader.
If you are skeptical about is stock trading is learnable or not please read Will I be able to learn?