How to Avoid Mistakes for Successful Stock Trading
Here is a list of the 5 common mistakes Traders make picking stocks to trade:
1. Relying on others to find stocks for you.
2. Not calculating the Risk versus the Reward before entering the trade.
3. Not correctly determining the proper Stop Loss placement, which affects risk calculations.
4. Choosing stocks that have risk which exceeds your personal Risk Tolerance.
5. Trading against the Buy Side Institutional sentiment and their trend direction. These Institutions invest Mutual and Pension Funds using Dark Pools to place giant lot orders.
The mistake of relying on others to find stocks for you is very common. Most often gurus and stock recommendation services, already have a vested interest in those stocks. They have purchased the stock before they recommend it, and naturally if they can convince tens to hundreds of thousands of their followers to buy the stock too then the price will go up.
So now you are thinking that you could buy that stock and it would run up. But recommendation services are often large lot Traders. So as small lot Traders buy, they start selling large lots for profits. That is how they make their money.
Beginners go to the "Basics of the Stock Market for New Investors and Beginner Traders" 12 webinar lessons.
When large lots are
selling and small lots are buying, what is going to happen to price?
The weight of the
large to giant lots selling will overwhelm the small lots, who have lower
capital resources. Whenever large lots are selling they control price and that
puts you at risk of whipsaw trades. If you have been trading at all you have
probably experienced those more than once, or a sudden reversal of the trend in
which you lose a lot of money.
The first step to
successful trading is learning the process for finding excellent stock picks
for yourself quickly by using stock scans.
The chart example below was recently a recommended stock pick when it was around $106-110 dollars a share. Large lot sellers overwhelmed small lot buyers, who thought they were "Buying-on-a-Dip" and instead the stock fell sharply.
Go to
the TechniTrader Learning Center and watch a wide variety of training webinars.
Trade Wisely,
Martha Stokes CMT
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Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.
Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
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Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.