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15 common trading mistakes and how to avoid them

15 common trading mistakes and how to avoid them


Trading mistakes are common in stock trading. But as a traders, you have to try to avoid trading mistakes. Traders make mistake in stock trading because they cannot control emotion, greed, fear and psychology.

Mistakes in stock trading are common both for newbies and experienced traders. Every day, stock market faces hundreds of thousands of sentiments. Hence, an experienced trader also fails to stick to his strategies let alone a newbie.

Let’s discuss top 15 stock trading mistakes.

1. Failure of controlling greed

Naturally, human being has greed. People are so greedy that they even enter the stock market without knowing stock market basic knowledge. Greed is natural behavior but you must control your greed when you are a trader.

Sometimes, stock touches your target level but you are waiting for further increase. Later, stock price reverses its trend and your gaining stock turns into losing stock. That is happened because of your excessive greed. Control your greed.

2. Failure of controlling emotion

Your second mistake is uncontrolled emotion. Market starts to behave unpredictably, but you are waiting without taking right decision. Because of your emotion, you have failed to execute right decision. As a result, you have to lose your trade. Avoid emotion and follow the market. Remember that market is always right.

3. Fear of losing money

Stock started to downward trend. You are waiting to upward trend. Later, price breaks another support level. Yet you are waiting for reverse. For fear of losing small amount of money, you have to close your position off by doubling your losing amount. You should follow stop loss rule when price break one support level.

4. Holding for reverse trend

You are waiting for turning your loss into profit. Even you may wait for cut short losing position. You should carefully observe the market and take prompt decision to sell of your stock. It is deadly mistake to hold a down trend stock.

5. Wrong stock selection trading mistakes

You have selected a wrong stock, but you are waiting to see the positive movement. I made this mistake many times. Unintentionally, I picked wrong stock but I expected positive result. Finally, I had to calculate huge loss for my stupidity. Get out a wrong stock within a short time.

6. Lack of understanding market movement

Market is always right. You may blame market but market follows its own behavior. When market is going up, you should wait to sell. When market is going down, you should buy. If you don’t follow this rule, you are welcoming to your losing trade.

7. Previous volume analysis stock trading mistake

Low volume stock means less buyers for this stock. Less buyers and sellers indicate less volatile stock. For better movement, you should choose high volume stock. If you bought a low volume stock, you should more careful. Otherwise, you may not get buyers when down trend starts.

8. Failure to understand major indicators

Some major market indicators are RSI, MFI, EPS and P/E ratio, Candlestick Chart and market index. We sometimes become so excited that we forget the major indicators of market movement. As a result, we make mistake and lose money.

Actually, uptrend market has high RSI and P/R ratio. High RSI and Price to earn ratio indicate that market will start correction any time. Hence, you should wait for buying decision until correction trend reverse.

9. Failure of catching psychology

Can’t you understand the traders’ psychology? Traders are real hero. They are major player of market movement. Most of the daily transactions are performed by traders. Failure of reading other traders’ psychology, you may not follow the trend. Find out market trend as  early possible to earn huge money.

10. Buying stock trading mistakes in uptrend market

Another mistake I made many times. I chased to catch a running stock in bull market. As a result, I bought this stock at high price. Next day, price started to fall and I made huge loss. So, never chase for a stock. Wait for perfect time. If you can buy a good stock at right time, you have high chance to succeed.

11. Lack of patient

Do you have patient? If your answer is “YES”, you are already an experienced trader or are going to become an experienced trader. Why did I say so? Because, trading is a game. To win the game, you need to hurry or patient. All are greedy? Be patient. All are fear? Be patient. Take your buying or selling decision with patient.

12. Sector selection stock trading mistake

Did you make wrong sector selection mistake? I did many times. Later, I corrected my mistake. When traders were busy with insurance section, I was busy with fuel and power section. Why did I do so?

Because, insurance sector was already over valued for excessive buying pressure. I didn’t make mistake to buy high rate and wait for huge loss. I took fuel and power stock and made realized gain. So be careful choosing a right sector.

13. Failure to apply stop loss

Oh!! No. This mistake is part and parcel in my trading career. Whenever I took a wrong stock, I made huge loss without following the golden rule of stop loss. I expected that market may correct and my holding would rise.

But, emotion doesn’t work in the market. My request to you, use stop loss rule strictly. If you have capital, you may make money later. But, if you lose capital, you cannot search for better opportunity.

14. Timing mistake

Timing mistake? Stock market is T-twenty cricket game. If a player misses a ball, he has missed a point to win. In stock market, timing is the main culprit, which has full power to turn a gaining stock into a losing stock within a few moments. Timing mistake means you lose the battle. Hence, be careful about timing mistake.

15. Stock trading mistakes for failure in strategies

Last but not the least. As a trader, you have own strategies. You may not follow your strategies because of greed or emotion. This is one of the a common trading mistakes. Always strict to right strategies in every situation.


From my trading experience, I have already mentioned top 15 common mistakes in stock trading. I hope many mistakes have matched with you. We should try to avoid these mistakes. If you have made some other mistakes, please refer us in comment section. By learning and sharing knowledge, we can expand our own knowledge. Happy trading!

Founder of The Financial Ask


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