A list of mistakes that hinder traders from reaching their optimal gains in the stock market.
- Failing to cut losses - Cut your losses. Protect the bulk of your investment. Cutting your losses means you live to invest again.
- Averaging down - This means throwing good money after bad money.
- Getting emotional - Don't fall in love with your portfolio, keep your relationship strictly professional.
- Ignoring charts - Charts allow you to see whether the majority of other investors are bullish or bearish on a company, which ultimately determines the trend.
- Buying on tip or on rumor - Always do your due diligence, even if the news is reported by the company themselves.
- Buying because of a dividend - the dividend will not help you with enormous capital gain losses if the stock falls.
- Not having a strategy - Not having a strategy means you are setting yourself up to emotional/irrational trading.
Write this list on a notepad someplace by your computer and refer back to it prior to making ANY and ALL trading decisions. If you notice that you have violated one or more of these rules, revisit your investment approach.
