Stock Trading- 4 disastrous mistakes to avoid
Submitted On 2008-07-30
Mistakes are great learning tools of life; we learn and grow by mistakes. Some of the aspects of life you have mastered today are accumulations of mistakes that you did not give up on, but do you know that one mistake in stock trading action or decision can be disastrous, it can incapacitate your portfolio and therefore it is very important you understand how to avoid these stock trading mistakes. Lets get started shall we?
1. Overdependence on Stockbrokers
Stockbrokers are a fantastic bunch of people; a good stock broking firm would be one that has a sound research department. Your stock broking firm is supposed to be your backbone in terms of stocks picks, but these days stock broking firms have abdicated this very important responsibility for personal gains. Therefore, you must take responsibility for decisions bordering on stock picks, when to buy and when to sell.
2. Depending on hype to buy a stock
Many stock investment journalists are bias in their write up concerning certain stocks in the capital market. They do this either because they have vested interest in such stocks or they are sponsored to write sensational articles in their columns in order to create artificial interest about a stock, therefore endeavor to carry out your research employing sound analyzing tools that are readily available to you on different platforms both online and offline.
3. Overdependence on overzealous share analyst
Once every now and then, you get compelling tips from your share analyst about a hot stock that has a sure fire prospect, ensure you do your own thorough investigation about that hot sure fire stock before calling your broker to buy; otherwise you will be courting trouble with eye open. No matter how hot a stock is; common sense reasoning should warn you to cross check your tip by considering information from several reliable sources. 4. Buying a rising stock without knowing the reason behind the rallying up
There are some investors that form the habit of watching daily trading activities in the pages of investment newspapers, observing stocks whose prices tends to be rising steadily, they get excited and take position by buying into such equities without knowing the force responsible for the upward pull. Understand that there are many reason why the price of a stock will rally up, ultimately there is a peak point where there will be a reversal of the price, if you donít understand it, it could be disastrous avoid it; you could end up in a mess.
Information is key when it comes to making awesome profits from the stock market, get practical, workable and sound information concerning every stock you are interested in. Weigh each stock in their own strength; itís not a difficult task if you know how to apply basic stock trading skills.
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John Efetobor is a Stock Analyst and Investor. Visit: http://stocktradingrevolution.blogspot.com
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