The world of trading and the stock market is exciting, but people often confuse it with the lottery, which is everything but that. That is why most of them don’t do research, and later complain that they’ve lost money.
Trading is patience, hard work, and discipline. If you want to make an investment that will last, keep reading.
1. Going in Unprepared
In trading, you shouldn’t rely on luck, but knowledge and preparation. Educate yourself properly and reach out to anyone you find resourceful about the matter. You need to know how the market works, what you want to gain and build your trading plan. If this is a game, then it’s a game of prediction and patience. You are acting at the right moment. Many free online courses are good and can prepare you for the basics or even more. You should know that this is an investment not only financially, but regarding education. Even if you don’t become a trader, you will gain more sense about the world’s economy, politics, and structure.
2. Lack of essential Tools
When we say tools, we include everything from brokers to software. As we noted above, you need to be prepared before you dive into the stock market world. Sometimes the smallest detail can change the whole outcome of your trade. See what you have, and find what you lack. There is no shame in it, and it can only benefit you.
3. Going Big Too Soon
You will often hear people say how they’ve lost so many because of a scam. Be careful about that. In most cases, these people expected to earn a million dollars in a week or even a day. They put in everything they have, and then expect to get so much more than they put in before even researching it. They are usually the ones who don’t even know how to manage money properly.
Money management is essential because it can help you with your trading strategy. Knowing how much you are ready to lose without fatal consequences makes it easier to build up your trading experience and gives you a better chance of gaining capital. Remember – trading is an investment, and you shouldn’t approach it like it’s somebody else’s money. Of course, you are going to think about potential gains, but be aware of potential losses. That’s why you need proper tools and even advisors.
4. Are you learning or just blindly following?
We said that a mentor could be a good thing, but only if it’s the right one. You can learn a lot from their way of trading. Please don’t fall into a trap where you’ll want to become them. It’s okay to be successful like somebody (or even more than them), but trying to be them is an entirely different thing. They have other goals, a different mindset, and you never know what they are trying to achieve. Maybe they will change their opinion in a year from now. Try to catch up on their advice and then see how you can implement it into your plan, without completely changing it. Your goal is to become self-sufficient, not a copycat that will fail miserably in the end. Learn, but follow your gut.
5. Impulsive trading
Newbies tend to lose lots of money when they don’t do their research. The worst thing that usually happens is that they try to get the money back by making another trader and placing more and more bids that will be bad because they are becoming impulsive. They stop thinking about strategy – they think about the money they lost the first, forgetting that they are still failing by not investing smartly. Never trade to make up for your losses. That is why we highlighted the importance of having a plan and educating yourself. You don’t have trade all the time. If you are under pressure, take a break. It is always better to look at things with logic rather than emotion on the stock market.