Normally, a lot of new traders/investors make the same mistakes while trading/investing into stock market and lose their hard earned money within seconds or days.
Some basic mistakes that a newbie commits are:-
- They trade most or all of their capital on just one trade.
- Do not put a stop loss.
- Most people have the ‘I know it all syndrome’ and trade blindly by intuition and guessing.
- Are in hope for quick, big profits because of which they buy more no. of shares and costly shares ending up in paying huge taxes plus if the CMP moves against their will, they end up in huge losses.
- Do not maintain a specific risk/reward ratio.
- Stop loss is more and targets are less.
- Trading without identifying a trend which is almost equal to trading without a reason.
- Buy a stock in the morning and wait for it to go up.(It may not go up even in the afternoon)
- In Intraday, open positions at 9.15am.
- They trade daily.
- Trade on tips without using their brain.
- Trade without charts.
- Don't know where exactly to place a stop loss.
- Trading without a trend.
- Don't know what a trailing stop loss is.
- Overtrading.
- Rely completely on indicators.
- Do not set a specific limit of shares to buy or sell for the day. For eg :- If I earn rs1000 daily, i will quit trading for that day.
- Do not open account in low brokerage firm because of which the taxes increase.
- Buy shares when the bullish trends ends.
- Most important - They don't know how the market works.
BY ABHIRAM DAPKE
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