TechniTrader Beginner "5 Common Mistakes Traders Make Picking Stocks"

How to Choose Stocks to Trade

Selecting the best Stock Picks is can be a simple process if you avoid the most common mistakes Traders make when choosing stocks to trade. Using a Stock Pick Process can help you speed up finding stocks to trade, AND improve the quality of every stock you trade for consistent success.

Here are 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 with giant lots.

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Today we will discuss the first most common mistake in more detail. Everyone wants trading to be easy, and it can be a whole lot easier than what most Retail Traders do and experience. All too often Retail Traders are expending a huge amount of personal time and more energy than they realize. This is a COST to your trading. Remember that when you are trading for profit and income, your time has to be factored in as a cost. So how much are you worth? Write it down.

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 okay, sure so that would be great right? You could buy that stock and it will run up. But recommendation services are often large lot Traders. So as smaller lots buy, they start selling larger lots for profits. That is how they make their money.

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When large lots are selling and smaller lots are buying, what is going to happen to price?

The weight of the larger to giant lots selling will overwhelm the smaller 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. 

TechniTrader is "The Gold Standard in Stock Market Education." Go to the "How to Use Scans" webinar the website:

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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.


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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
TechniTrader DVDS with every course.

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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.