Trading is fun and lucrative. It’s the best way to invest money and get returns. It’s also very fulfilling but that part usually comes later.
In the beginning, trading is all about learning new things. Of course, the aim is to make money, but you’ll also be able to build experience and get better. Perhaps, that’s why it’s inevitable that you’ll make a lot of blunders as a starter.
However, as normal as mistakes are for new traders, some of them are very common and can be avoided by knowing about them beforehand. That’s why I’ve collated some very common mistakes that people make when they are just as a new trader.
Not Making Enough Research
In movies, you see situations where some traders invest in a stock because of their gut feeling and it pans out. Well, in real life, that situation is very rare especially when you’re a new trader.
Of course, I’m not saying that intuition is a completely bad thing. What I mean is that gut feeling that’s not backed up by research and facts is just guessing.
Before you enter a trade, you have to ensure that you intimately understand what you’re getting into.
Trading without a Plan
Why are you trading? What do you plan to gain from it? How much are you willing to invest?
You have to decide whether you want to make trading a side hustle or a career. The decisions you make will help you get your trading into perspective.
It’ll help you draw up a plan and decide the amount of time you will be able to dedicate to trading.
Trading Too Much
Many new traders often start trading with the intention to make money very quickly. As a result, they end up pushing their limits too soon.
The truth is, as amazing as it sounds to become rich in a couple of months, it’ll most likely not happen. And by raising the value or volume of your trade in order to make money quickly, you’re just exposing yourself to more risks.
You can’t just casually throw money into the market and expect some straight out of the movie scenario in return, it doesn’t work that way.
Ignoring Your Risk Tolerance
One of the things you have to figure out very early, perhaps even before your first trade is how much risk you can take on. The stock market is volatile and it may be difficult for you to get accustomed to its ups and downs, especially if you just throw money around without plan, research or knowledge.
Remember that every investment comes with a certain amount of risk in return. The higher the amount you’re likely to get in return, the higher the risk you’ll be bearing. As a beginner, lowering the risk as much as you can should be your duty.
You can try to reduce your risk level by getting professional coaching or trading advice on Roger Scott’s website before you begin anything.
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