| Here are some of the most common stock trading | | | | looking at always confirm your analysis by looking at |
| mistakes to avoid. Whether you are an experienced | | | | a chart with a longer time period. And don't forget to |
| trader or not it's important to avoid the pitfalls of | | | | be aware of where we are in the business cycle and |
| stock trading and have a disciplined trading plan. | | | | how that impacts the stock you are trading in. |
| Digging The Bottom | | | | Trading Without A Strategy |
| Trying to hit a stock exactly at the bottom is as | | | | Stock trading without a strategy is never a good |
| hard as exiting a stock at the top. Stocks very rarely | | | | idea. If you hear from a stock tip sheet or a TV |
| turn around in a 'v-shaped' bounce. Other investors | | | | program that a stock is hot, don't be tempted to pile |
| looking for value may well dabble at a stock on a low | | | | in without proper analysis. |
| but it will likely trade in a much lower range for some | | | | Maybe you've stumbled across a hot new product or |
| time. | | | | gimmick that you feel sure will take off along with a |
| It is therefore better to wait and track this new | | | | company's share price. By all means investigate but |
| trading range only entering the market again when | | | | don't buy on a wing and a prayer. Conduct proper |
| the stock breaks out of its range and heads | | | | fundamental analysis of the company's share price. |
| decisively higher. Sure, you may not get in at the | | | | Look at the technical indicators and decide whether |
| exact bottom but it's better to be safe than sorry. | | | | now is the time to buy or not. |
| Trying to Hit The Top | | | | Plan your trades as you would with any other stock |
| Avoid stock trading mistakes by trying to time the | | | | pick with clear entry and exit prices. Formulate a |
| exact top of a trading range for a stock. | | | | trading plan and stick to it. |
| Both tops and bottoms rarely arrive exactly when | | | | Trading Is A Business |
| they are supposed to. Over-enthusiasm leads | | | | Remember, stock trading is a business and another |
| investors to keep buying a stock when there is no | | | | common stock trading mistake is to take it |
| longer any fundamental reason to do so. Remember, | | | | personally. |
| the Dotcom boom of the late 1990s or the more | | | | Don't let a bad trade damage your self worth. OK, |
| recent boom of 2007. | | | | you made a mistake and these things happen. No-one |
| As always it is far better to hold the positions you | | | | is right all the time and a losing trade doesn't mean |
| have and keep moving up your stops to lock in your | | | | you are a terrible trader any more than a winning |
| gains. If something looks to good to be true it usually | | | | trade makes you the best stock trader in the world. |
| is and it's at this time you need to keep a close eye | | | | Don't fall in love with a stock either, no matter how |
| on your fundamental analysis. | | | | much money it's made for you. If there is a profit to |
| Trading Against The Trend | | | | take, take it. Sure you want to be right and feel |
| Stock trading against the dominant trend can be | | | | great when you are but nothing stays the same |
| easy to to do if you focus on too short a time | | | | forever and you must be ready to ditch any stock |
| frame. | | | | at the first sign of trouble. |
| Looking at a daily price chart may indicate a trend in | | | | As ever make you plan and stick to it. |
| one direction but, unless you are a day trader, it | | | | Conclusion |
| would be wise to first look at a longer term weekly | | | | To avoid these common stock trading mistakes |
| chart to better understand in what direction the | | | | remember to treat trading as a business, plan an |
| dominant trend is heading. | | | | entry an exit strategy and understand you will never |
| Regardless of the indications on the chart you are | | | | hit the exact top or bottom of a trading range. |