Traders and investors make many of the same errors, even though they utilize two separate trading transactions. Some blunders are more damaging to the investor, while others inflict far more damage on the trader. Both must be vigilant to avoid these frequent mistakes.
Here’s a list of the top 5 things rookie traders should avoid at all costs:
Table of Contents
Keep your stocks – Don’t sell too early
Just because your stock went down does not mean it will always go down. You can miss out on significant gains if you liquidate straight away. If you think the company is undervalued in the long-term, there may be an opportunity to buy low to fix this mispricing. And when good news comes out, the stock price could potentially skyrocket again.
Sell your stocks – Don’t hold too long
The best time to sell is when there’s blood in the streets. If you see that a company has no future and the stock price is dropping like a stone, then you should cut your losses and sell as soon as possible! Sometimes it’s better to take a loss than lose everything if the company goes bankrupt.
Investing on impulse – Don’t invest more than 5% of your portfolio
Many young people have seen how people bought bitcoin at $20k, so they go out and buy some altcoins on their own, hoping for another 10-fold return! It shows ignorance not only on trading terms but also concerning personal finance management. Never put more than 5% of your portfolio into a single trade. Keep in mind that cryptocurrencies and stocks can be risky, and you should never invest all your savings into these types of assets!
Investing on pure speculation
Many investors get caught up in the moment when they’re trading and go with the crowd because it feels like ‘everyone is making money from this company. That’s when people start to make bad decisions. You will always see news about companies, but don’t believe it if it doesn’t make sense! It may be fake news trying to manipulate prices! Many of these fake news websites pay for Google ads, so they need to pay more to rank higher and spread more of their message. It can trick investors into buying high and selling low!
Investing in tips – Don’t just take advice from friends and family
These people are probably just trying to get you to buy so they can sell for a profit. Friends and family may mean well, but this is not the best way to judge what’s undervalued or overvalued in the market. Your best bet is to do your research, look at company fundamentals, read analyst reports, and talk to your financial advisor before investing!
In conclusion
Stock markets are extremely risky, and there are many rookie mistakes you can make. Even experienced traders have to be careful because the stock market is very dynamic! If you avoid these mistakes, you will have a better chance of preventing losses.
If you’re still unsure about navigating these risks, check in with a trusted broker like Saxo.
The article above warns investors about some common trading mistakes that they should try their best to avoid. For example, it says not to sell stocks too early or hold onto them too long because the investor could profit if the value comes back. Another mistake is trying to time when to get in or out of the market. By looking at speculation rather than fundamentals would help make more informed decisions.
It also points out that investing in tips from friends and family may not be the best way since these people may have their plans and could be trying to manipulate the price. The last mistake is not doing enough research on your investment before making a purchase. The article’s different tips could help investors prevent losses, especially for inexperienced traders who don’t know what they’re doing yet.
