Top Mistakes New Investors Make with Online Trading
Doing things right often entails avoiding doing the wrong things. With online trading if you sidestep the most common pitfalls you’ll end up ahead of 90% of new investors. Here we’ll explore some of the common moves newcomers get wrong.
Avoiding Mistakes Saves You Time and Money
You don’t need to reinvent the wheel when it comes to trading stocks. You just need to take the advice from successful traders and avoid what unsuccessful traders are doing. You’ll not only protect your hard-earned money, you’ll save yourself time and shorten the learning curve.
#1: Holding on to Loser Stocks
The fear of dumping a stock too soon causes many new investors to hold on to a losing stock for too long. You don’t take the loss until you sell, but keep a stock too long and you’ll have a harder time recouping the money you’ve lost.
Success with stocks is not a matter of getting it right every single time. You have to know when to sell to minimize your losses as well as maximize your gains. Do that enough times and your account will steadily grow over time.
#2: Being Too Aggressive
If you are starting your stock trading later in life you might feel the need to be extra aggressive to make up for lost time. While it is sometimes good to be aggressive in order to capitalize on a winner, if you get greedy and get extra aggressive it can backfire on you.
#3: Getting Caught Up in the Hype
It is very easy to get caught up in the hype and buzz of a particular stock, especially when choosing penny stocks. If it seems like a sure thing, you’ll be more likely to buy more shares than you otherwise would. But you need to learn to temper your excitement and keep a level head even when it seems like you know something everyone else doesn’t.
#4: Banking on a Turnaround
If a stock is down and you wait for it to turn around before unloading it you could be in for a long wait. There’s no guarantee that the stock will ever recover to a price that you’ll want to sell at. Many new investors bank on a turnaround that never comes.
#5: Betting the Mortgage Money
Everyone knows that you shouldn’t “bet the milk money”, but it’s amazing how many people still do. Only use money you’ve set aside for investing in high-risk, high-reward ventures.
You should have an Investment portfolio set up to steadily earn with low-risk vehicles. When trading online for faster profits you should limit yourself to a budget you feel comfortable with, and reinvest your earnings to scale things up.
Learn From Other People’s Mistakes
Just as you can use the good advice from successful investors, you can use the mistakes made by unsuccessful investors as a way to preserve your nest egg. There’s no reason to waste your money making the same mistakes others have made. Learn from their mistakes and you’ll have the best chance of success with online trading.