Here are some most common mistakes to avoid for day traders or intraday
traders to consider when you have a thought of investing. These mistakes can be
the biggest trading mistakes if not avoided. No matter you deal in Equity Cash,
Futures, Options, Forex or Commodity. You be a Gold Trader, or Silver Trader or
Crude Oil Trader or Stock Cash Trader, these mistakes will cost you heavy. When
people think of investing, there is a fear of loosing money also. Its not what
you are investing for right? You are investing your hard earned money to make
money not to loose.
This market you will be loosing money I am making it very clear to you,
people only talk about and show the bright side but no one talk about the dark
side. Its not that you will master it, the masters are still learning it; what
do you think Mr. Rakesh Jhunjhunwala is not making loss? Its only about making
the right decision on right time.
You buy a stock make some profit exit it, if things go wrong be prepared
to book loss also. Its okay its part of the game.
Now, what are the most common mistakes you should be knowing and
avoiding them:
- Not Trading/Investing regularly: People trade once or twice incur loss and stop trading, its not a gambling its a profession a legalized business. Learn to do it on regular basis.
- Don't consider Brokerage and Taxes: Calculate the profit including brokerage and taxes, for every broker there are brokerage calculator are available. Open your broking house website and calculate how much actually you are going to make so that you don't feel disappointed later on. You cannot save on taxes but on brokerage change your broker if you are paying too much brokerage.
- Don't diversify investments across asset classes, to spread risk and end up making losses. You need to deal in every segment not in a specific one like Equity Cash or FnO or Commodities.
- Don't maintain a proper balance in investments among different asset classes: People either invest too much in one segment or too less in other and end up loosing money or opporutinity to make money. Keep a sufficient amount in all so that you can trade as per opportunity.
- Don't expect reasonable returns from trade they make, once they are earning lets say 1000 they will wait for 2000/- profit then 3000/- and eventually market reverse from there and they miss the profit.
- Not learning from mistakes: People end up losing hard-earned money due to wrong decisions. But it is important that you learn from your mistakes to avoid such losses in the future. Before investing you should consider your profit amount and your loss appetite.
- Don't trade with thorough and detailed analysis: Traders don't restrain from buying or selling in haste and that lead to financial losses. If the fundamental aspects of your investment are good, you need not worry about volatility.
- Don't want to spend time with market: Traders don't want to spend on investments learning or analyzing and want returns from it which is absolutely not possible.
- Avoid PAID financial Advisors: Traders are not keen to learn the basics or the fundamental or the technical of the market neither want to spend time on it. For such subscribing to SEBI REGISTERED Investment advisory is an option which they don't want to. No one provides you profit for free.
- Trade on Free Tips/Non SEBI Registered Agents: This is nowadays the most popular reason for the losses, people make trade on free tips and then incur losses. Being a non paid client they cannot claim in SEBI for the losses also. Always take the services from some reliable investment advisor who is SEBI registered to guide you and talk on monthly returns not daily or weekly.
- Get emotional: Most of the times traders get emotional with emotions of Fear and Greed that leads to lack of decision making capability. While trading keeping command on mind is most important.
- Speculative Trading: THE MOST COMMON mistake for traders if a share is going up they just by it or if its going down they sell it. Worst buying a falling stock thinking its devalued alot or selling a rising stock thinking its overvalued and will fall. It does happen but you should know the right time to do it random decision like this are gambling. If you do this thing you need a huge amount back atleast to hold that stock for another 50% rise and average your position on every 20% of change and exit at nominal profit.
If you are a trader already you can connect very easily with all the
points why you are in losses? Its not market that is bad but its we are unable
to understand how it works. If this market was not working as per expectation
it wouldn't be in existence for such a long time with increasing number of
traders and investors on daily basis.
By avoiding the above mentioned common mistakes probability of making
losses will be reduced. Loss is part of market that cannot be changed and no
one can be 100% but we can avoid some common mistakes to make better profits.